You are not logged in. LOG IN NOW >

Google Fiber In Austin: Has Real Competition Returned to Broadband Internet Service?

BY Nick Judd | Tuesday, April 9 2013

Is pressure at the margins of the high-speed Internet industry in the United States finally making incumbent providers feel the heat?

Google announced Tuesday that Austin, Texas, will be the second city to get its Google Fiber service. Google first launched the service, which it says offers Internet access 100 times faster than average broadband speed at affordable prices, in Kansas City in November 2012.

Also Tuesday, AT&T released a statement announcing that it was "prepared to build an advanced fiber optic infrastructure in Austin" — provided that AT&T receive the same terms that Google does on permitting, rights of way, licenses and incentives. At Gigaom, Stacey Higginbotham rightly notes that Google received such favorable terms during its expansion in Kansas City so various as to rival the menu at a New Jersey diner, rankling industry incumbents.

The dueling announcements come as gigabit Internet gets hot across the country. Monday, New York City officials showed reporters a demonstration of "micro-trenching" technology they will be testing out at 12 sites in five boroughs. In a pilot project with Verizon, the city will run fiber-optic cable along small grooves at the edges of city sidewalks, potentially opening new right-of-way unencumbered by relationships with other authorities like the state-run subway managers at the Metropolitan Transportation Authority. The City of Chicago has been in conversations since late last year about creating a new network in the city to provide gigabit Internet to consumers — a network that, according to a preliminary request for information, would both be open for third-party providers to use and also "neutral," meaning the host company could not privilege some people's Internet traffic over others. Gig.U, a project to build partnerships between private companies and universities with excess fiber-optic Internet capacity, has projects in the works in Chicago, Seattle, Gainesville, Fla., and six communities in North Carolina. Another initiative, Gigabit Squared, also has projects in the works in Chicago and Seattle.

Critics of the four companies that now account for the lion's share of broadband Internet services in this country — AT&T, Verizon, Comcast and Time Warner — are skeptical about whether AT&T's announcement was a signal that the telecommunications giant was going to marshal serious resources to compete with Google in Austin. But AT&T still responded to the Fiber announcement — meaning, perhaps, that Google is viewed as a credible threat.

"AT&T has to make a choice because I don't think there's a future for AT&T in Austin unless they upgrade," said Christopher Mitchell of the Institute for Local Self-Reliance, an advocacy group that works in support of municipally owned broadband networks and no great fan of the major telcos. "Usually when there's a fiber-to-the-home network, the DSL market sort of dries up."

This means that when Google launches Fiber — it plans to start serving customers gigabit-speed Internet, voice and TV by mid-2014 — its planned 7 megabit-per-second-and-totally-free offering will eat AT&T's lunch. The only survivors in that scenario will be Google and cable Internet and TV providers.

But is AT&T serious? It says in its news release that its investment in Austin "is not expected to materially alter AT&T's anticipated 2013 capital expenditures."

"That suggests how serious they are. Likely a ploy for more deregulation on their part," Mitchell said in a follow-up email.

AT&T's very specific wording could also be a maneuver to bring the city back to the bargaining table.

More details would also be a sign of how serious AT&T is in attempting to protect its market share with a new product rather than mere maneuvering. For instance, Google Fiber offers symmetrical speeds — meaning uploading content is as fast as downloading it, crucial for entrepreneurs, businesses, and home-office makers, but unpalatable to content companies who will face greater competition and, possibly, greater piracy. Is AT&T going to offer an asymmetrical network as well? Similarly, AT&T already has infrastructure in place in Austin — but some of the concessions Google asked for in Kansas City, and presumably is asking for in Austin, relate to creating a physical plant that it doesn't already have. In such inside-baseball tea-leaf-reading details, the truth surely resides.

A spokeswoman for Austin Mayor Lee Leffingwell has not yet returned an email and phone call requesting comment.

Miranda Neubauer contributed reporting