Google Fiber is rallying for customers again, but it’s already wiring some Johnson County neighborhoods
08/26/2014 5:37 PM
08/26/2014 10:21 PM
Google Inc. insists it builds its residential Internet network only where enough customers first sign up for the cat-quick connections.
The company says it measures demand by counting the customers who pledge to buy hookups from Google Fiber during sign-up “rallies.”
In fact, the company on Tuesday announced the start of rallies in 34 neighborhoods — the company calls them “fiberhoods” — in Merriam, east Lenexa and east Shawnee.
Yet it has already begun stringing its fiber optic cables in some of those areas before asking residents there to commit themselves to buying Internet or TV subscriptions. Crews are at work at one of the costliest, most labor-intensive stages of the work in Johnson County.
In Lenexa, for instance, city officials say the company has completed construction of the Google Fiber Internet backbone in the suburb. It’s now working on “distribution and service” into individual neighborhoods, said Lenexa’s community development director, Beccy Yocham.
That seeming full-steam-ahead approach could reflect a growing confidence by Google that it can find customers, especially in the market’s well-heeled suburbs.
A Google spokeswoman insisted that the advance construction reflects no shift in policy. The rallies, she said, still determine in which neighborhoods it will sell service and in which ones it won’t.
Ongoing work ahead of rallies, Google Fiber spokeswoman Kelly Mason said, is evidence that “there’s more construction we’re doing up front.”
“That would be a matter of shortening the time” it takes to install service after a neighborhood meets Google’s thresholds — numbers set to balance the cost of construction against the number of subscribers needed to make that investment worthwhile.
“It’s important for folks to sign up and encourage their neighbors to sign up, too, because we will only connect homes (in neighborhoods) that meet their sign-up goal,” Mason said in an email. “We have been working to complete some early construction in parts of Johnson County that will help us hook up customers as quickly as possible, but this ‘prework’ won’t affect which fiberhoods will get Fiber.”
But the new pattern — build first, qualify the neighborhood later — would seem to undercut part of the business model championed by Google Fiber as critical to making its ambitious infrastructure plans practical.
And some analysts are dubious that Google would spend the money needed to bury cables or string them from utility poles in a neighborhood and then decide not to sell to willing customers.
“The main cost of providing that service has been incurred,” said Roger Entner, a telecommunications analyst for Recon Analytics. “Laying the fiber for the last 10 to 20 feet from the street to your house is a minimum incremental cost. … To lay fiber there and not sell service in those neighborhoods would be to cut off the nose to spite the face. I can’t see them doing that.”
Google might likely expect to find enough customers in the Johnson County neighborhoods. The vast majority of neighborhoods Google already has looked at have met its threshold. Only in small pockets, almost entirely in poorer neighborhoods, have sign-ups fallen short of the Google-established goals.
Google chose Kansas City in 2011 over 1,000-plus communities angling for the search giant’s first attempt at selling home Internet connections.
Google Fiber is distinct because it sells industrial-strength broadband at consumer prices. For $70 a month for stand-alone Internet, or bundled for $120 with a cablelike TV subscription, consumers buy upload and download speeds of nearly 1 gigabit per second. That’s almost 100 times faster than the national average for downloads at home, and nearly 1,000 times quicker for downloads.
It also sells a pokier, starter connection. After paying $300 for installation, consumers pay nothing for at least seven years of relatively slow hookups — downloads of 5 megabits per second and 1 megabit uploads.
The purpose of the rallies already has been growing suspect. When sign-ups lagged in the first rallies — in Kansas City, Kan., and the midsection of Kansas City — Google extended the sign-up period.
And although it said customers would only have one chance to sign up, it circled back to neighborhoods where initial interest was low and held a second round of rallies. Google is still wrapping up installations in Kansas City, Grandview, Gladstone and Raytown in neighborhoods it says showed strong enough demand.
Ongoing construction in Johnson County could serve as evidence that the rallies are a “very effective marketing tactic to build interest and urgency” rather than the deciding factor on where Google will sell service, said broadband consultant Glen Friedman of Ideas & Solutions Inc.
For instance, Google says customers in central Johnson County have until Oct. 30 to promise to buy service — and for their neighborhoods to qualify. Someone eager to tap into Google Fiber’s high-speed lines might be tempted to pressure their neighbors to sign up as well to increase the odds of the service being available.
Another analyst said any construction in advance of Google Fiber rallies could suggest the company has learned from its earlier experience in the Kansas City market. It may have developed better ways to anticipate demand, said cable industry analyst Larry Gerbrandt of Media Valuation Partners. And, he said, the company may want to keep its subcontracting crews busy.
“They’ve probably gained a lot of information from what they’ve already done,” he said. “And now you’re in the suburbs where you can anticipate your penetration is going to be pretty high.”
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