You risk your mojo, you risk everything baby.
The troubled municipal fiber to the home system in Provo, Utah will soon be Google’s problem, assuming the city council signs off next week. The terms of the deal haven’t been released yet, but Google’s selling proposition is that it will connect all the homes along the existing fiber route and provide them free 5 Mbps Internet service for at least seven years. The only cost would be a $30 connection fee. Paid upgrades to faster speeds and television service would be offered, but not required.
The iProvo network passes substantially all of the 35,000 homes in Provo, but only about a quarter have chosen to hook up. The city first tried to operate the system itself, then sold it to a private operator, which also couldn’t pay the bills. So the city took ownership back again, and started looking for another buyer. Over the past seven years, the city has subsidized the system with tax money, fees on utility customers and surplus revenue from other municipal utilities.
Questions still to be answered about the deal include the level of responsibility Google will have for paying off $37 million in bond debt held by the city, the payments due the city over time and whether the city will continue paying subsidies.
Regardless of the terms, Google is proving it is serious about the fiber business by risking more than money. Its reputation is now at stake. The first two Google Fiber cities – Kansas City and Austin – were cherry picked. Bad results could be written off as successful experiments if necessary. But in Provo, the company is saying it can turn around a proven failure. Google is putting its mojo on the table, and that’s something it can’t afford to lose.