Bloomberg News

Google to Offer Fastest U.S. Internet Service in Kansas City

September 12, 2012

Google Set to Offer Fastest U.S. Internet Service in Kansa

The effort, known as Google Fiber, marks a new stage for the Internet-search giant, Google Inc., which will run the program as a for- profit business. Photographer: Jin Lee/Bloomberg

Google Inc. (GOOG:US) will move a step closer to offering the fastest citywide Internet service in the U.S. tomorrow when it picks the first neighborhoods in Kansas City to get hooked into a new fiber-optic network.

The system will provide online speeds of 1 gigabit per second, about a hundred times faster than the average U.S. connection, along with television programming. Google said on Sept. 9 that at least 180 out of 202 neighborhoods in the Kansas City area have qualified for the project, which will only go into areas where residents have requested the service.

The effort, known as Google Fiber, marks a new stage for the Web-search giant, which will run the program as a for-profit business. Unlike Google’s free Wi-Fi service in its hometown of Mountain View, California, or the high-speed fiber project at Stanford University, Google Fiber isn’t an experiment, said Kevin Lo, the general manager in charge of the project.

“This is a real business,” Lo said in an interview last week at the Google’s Fiber Space, a converted mini mall on the border of Kansas and Missouri. “Our goal is to be successful in delivering 1-gigabit Internet and TV in Kansas City.”

Google picked Kansas City from a list of more than a thousand cities and gave residents six weeks to preregister for the service. The coverage includes portions of Kansas and Missouri, offering an alternative to broadband from Time Warner Cable Inc. (TWC:US), the area’s main Internet service provider.

Pricing Plans

Google Fiber offers three plans. Residents can pay $70 a month for an Internet connection alone or $120 for a package that includes TV service, a digital video recorder, and a set- top box with a tablet-computer remote control. With the third option, customers pay a $300 installation fee and get at least seven years of free Internet access, though at slower speeds.

Google’s Fiber Space showroom is outfitted with mock living rooms where members of the project’s 60-person staff show the power of 1-gigabit speed -- for instance, streaming eight high- definition videos from YouTube at the same time.

The company is trying to spur people’s imaginations in terms of how they can use faster speeds. That in turn may create demand for new online services -- just as the earlier rollout of broadband helped set the stage for Netflix Inc. (NFLX:US)’s download service and Internet storage.

Still, Google hasn’t said if it will expand the fiber network beyond the Kansas City area. That small scope will limit the benefits, said Jan Dawson, an analyst at London-based research firm Ovum Ltd.

Small Scale

“Things like Netflix and online backup only thrived with the availability of national broadband,” Dawson said.

The costs of connecting fiber-optic cable to homes and operating the network have hampered other companies’ plans. Verizon Communications Inc. (VZ:US) curbed its FiOS expansion last year, and AT&T cut back on the scope of its U-verse fiber rollout.

In Kansas City at least, Google Fiber puts pressure on Time Warner Cable, which offers a maximum speed of 50 megabits per second. Residents now have another choice for TV and Internet service, even if Google doesn’t offer popular channels like HBO, for example. Google announced today that it had just added ESPN and some other Walt Disney Co. channels to its lineup.

Time Warner Cable welcomes the competition, said Justin Venech, a spokesman for the New York-based company.

“We have a robust and adaptable network,” he said in an e-mail. “We are confident in our ability to compete.”

Google has taken a less expensive route by selecting individual neighborhoods, instead of using a blanket approach, Dawson said.

Qualifying Level

Each neighborhood, or “fiberhood” as Google calls it, had to have 5 percent to 25 percent of the homes commit to the service, depending on how easy it would be to wire the residences. Participants also had to pay a $10 fee to qualify. To get more people on board, especially in poorer neighborhoods, Google even sent workers out in ice-cream trucks.

The company, facing criticism that low-income areas won’t get access to the network, said earlier this week that neighborhoods that didn’t qualify this time around will get another chance. The goal is to help shrink the digital divide -- the disparity in Internet use among the rich and poor.

“Everyone here wants to solve the digital divide,” Lo said. “This is a massive issue for the U.S. and our society.”

The importance of Google Fiber is the magnitude of the speed improvement, he said.

“Speed matters,” Lo said. “We are on the right side of history. As we saw moving from dialup to broadband, it unleashed a wave of innovation.”

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net


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Companies Mentioned

  • GOOG
    (Google Inc)
    • $584.77 USD
    • 4.82
    • 0.82%
  • TWC
    (Time Warner Cable Inc)
    • $154.62 USD
    • -0.04
    • -0.03%
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