Grab the Google rabbit by the tail and face the situation.
Google’s vague pledge to complete fiber networks it was already building is worthless, it turns out. According to a story by KHSB-TV, residents of some Kansas City neighborhoods who signed up for service but never received it are getting cancellation notices from Google…
Thanks for signing up for Google Fiber. Although we’ve been working hard to bring you service, we’re unable to build our network to connect your home or business at this time.
Unfortunately, that means we’ll need to cancel your Fiber account. If you paid a deposit, we’ll refund your deposit amount to your original form of payment in the next two weeks.
If you signed up for our Fiber 1000 or Fiber 1000 + TV plan, your additional 1TB of Google Drive storage will be removed and your storage limits will be set back to the free levels. Everything you have in Google Drive, Google+ Photos and Gmail will still remain intact and be accessible, but you won’t be able to create or add anything new over the free storage limit.
We’re so sorry for any inconvenience we’ve caused you. And we’d like to keep you updated on our progress if we can bring you Fiber in the future. If you would like to be contacted, please sign up for address updates again by checking your address at google.com/fiber/kansascity.
The Google Fiber team
According to a story by Karol Bode in DSL Reports, the company’s PR people are insisting that “Google Fiber loves Kansas City and is here to stay” and pointed to other locations in the metro area where construction continues.
I’d love to speculate about what Google Fiber is really up to, but the likeliest explanation is that it doesn’t know itself. It’s pushing microtrenching in Austin and jumping into the fixed wireless Internet service business in the San Francisco Bay Area. Or at least it will if the California Public Utilities Commission approves its purchase of Webpass on Thursday.
Google Fiber is pulling its 5 Mbps data plan off the market in Kansas City. It’s often mischaracterised as free, but it wasn’t quite that. The deal was that people living in a soon-to-be blessed fiberhood could pay a $300 installation fee and get 5 Mbps service for seven years. Speculation is that Google Fiber is trying to pump up revenue by steering low end subs to a $50 a month, 100 Mbps plan with free installation.
That might be true enough, but I think there are a couple more important factors at play. First, indications are that the $300 deal wasn’t very popular. A survey done by Bernstein Research in 2013 estimated that the 5 Mbps tier was accounting for maybe 10% to 15% of Google’s subscriber base. That makes sense: people who are happy with 5 Mbps are not prime candidates for fiber to the home service. Some people will find the deal attractive, but it won’t be a big draw.
The second factor is multiple dwelling units – MDUs. Google has been battling it out with landlords, trying to get them to pay the $300 installation fee for each apartment in a building, on an all or nothing basis. Landlords would write a big, upfront check, residents would get the slow free tier, and if they upgraded to gigabit service, Google would rebate the installation fee a little bit at a time over the course of a year. I never understood Google’s thinking on that. Building owners would be likelier to want Google to pay a big upfront fee, and then share revenue forever. It’s how they think.
If Google provisions the 100 Mbps tier the same way it does for gigabit service, it’s a screaming good deal for the price sensitive side of the market. The selling proposition matches cable speed promises and then actually delivers, all at a DSL price.
Google Fiber strategy of cherry picking neighborhoods in the Kansas City area seems to be working. A study done by an investment research company shows that 75% of the homes in medium to high income areas that are passed by Google Fiber are subscribing to it (h/t to Fred Pilot at Eldo Telcom for the pointer). In low income areas, the study claims that 30% of homes passed are taking Google’s service.
Bernstein Research commissioned the study, which involved knocking on the doors of 350 homes in Google’s current – and limited – service area. Bernstein is a “sell side” research house, which means that its clients are analysts and underwriters who package and sell deals, not those that buy stocks.
The full study hasn’t been made public – that’s for Bertstein’s paying clients, and rightly so – but the company came to the conclusion that 1. it expects Google Fiber to get a 50% or better take rate for high speed Internet service when it expands its footprint to the entire Kansas City metro area (presumably not Overland Park, though), 2. four-fifths of those subscribers will take both TV and Internet, and 3. another 10% will opt to pay $300 upfront and take a 5 Mbps down/1 Mbps service for no ongoing, monthly fee (free, in that sense).
The research also concludes that the 30% take rate for low income areas (which is not the same as saying low income households) means that Google isn’t cherry picking, but since all the initial build-out areas – low, medium and high income alike – were chosen on the basis of consumer interest, I’m not sure how that follows.
Berstein’s bottom line conclusion is that Google Fiber is doing so well that it should be regarded as a long term business strategy, with at least U.S.-wide ambitions, rather than a goad to incumbent telecoms players or a test-bed for new services. The bits and pieces of the data that were made public are certainly consistent with that notion, but hardly proves it. The proof will come if and when Google decides to step out with fiber builds to a much longer list of metro areas. That’s a question that won’t be answered until the end of the year, if then.
Google plays through when Overland Park misses its tee time.
Google Fiber’s take on cherry picking seems to be to leave rich but stroppy communities to the tender mercies of cable and telephone companies, while building where the municipal welcome wagon drives out to meet them. Overland Park, a Kansas City suburb with lots of prosperous people and good paying jobs, appears to have to permanently gone to the back of the fiber construction line – if not out of it completely – because the city council dragged its feet when it came time to sign a contract. According to a story in the Kansas City Star, by Yael Abouhalkah…
Google Fiber project manager Kevin Lo was on speaker phone this week, talking to The Star’s Editorial Board, when I asked about the strained Google-Overland Park relationship.
After first evading a direct answer on when fiber would come to that city, Lo said this:
“We will see what happens when we’re finished up with the rest of Kansas City.”
On the other hand, Google is looking into what it might take to extend fiber to poorer neighborhoods in Nashville, Tennesee. In contrast to Overland Park, council members there are lighting a fire under government departments to get them to move faster. Nashville is one of the 34 cities that Google is considering for its next round of fiber builds and the metro council wants to make sure its fiber-ready check list is complete.
Google clearly and deliberately intends to be disruptive, as it continues its gigabit crusade. That means facing down opposition, from incumbent carriers or nimby neighborhoods alike.
No red tape to be seen.
“In Kansas City, my crews don’t wait for inspectors, the inspectors wait for them”, said Milo Medin, the head of Google Fiber. “We work with communities that make it easy for us. if you make it hard on us, enjoy your cable connection.”
Medin spoke last week to organisations funded by the California Emerging Technology Fund at a meeting hosted by Google in Mountain View. His message was that upgrading broadband infrastructure, improving service and lowering costs is an economic driver that should be proactively supported by policy makers and public agencies. “Cities and states can have policies that make building easier or harder”, he said.
Another example he cited is Austin, Texas, where the city says it’s adding ten new staffers to the permitting department to handle the expected flood of paperwork as Google’s fiber build out ramps up there.
The City of Provo in Utah certainly made it easier for Google to offer service, turning over ownership of a city-built but still incomplete fiber-to-the-home service for nearly nothing. Medin said Google Fiber’s first official customer in Provo was hooked up last week, as the transition from city ownership continues. The company is also opening a storefront Fiber Space in Provo, where curious customers can come and see what a gigabit connection would do for them.
One thing it’s already doing for people in Provo is lowering Internet pricing all around, as competition heads towards a boil. According to Medin, Comcast is offering 250 Mbps down/50 Mbps up for $70 per month and 105 Mbps triple play for $120 per month, matching Google’s price points if not its gigabit.
“Do any of you have a cable operator offering that in your area?” he asked.