The Stakes (and Steaks) Are Great for Google in Kansas City

A milestone occurred this week as the first premises in the Kansas City, Kan., neighborhood of Hanover Heights are being connected for the Google Fiber project. The city is acting as sort of a guinea pig — in a good sense, if that’s possible — for the project, which will traffic data at unprecedented speeds. The project will bring 1 Gigabit per second service to homes and businesses.

The project is so hot that companies are finding creative ways to get into the service area. Venture Beat reports on Homes for Hackers and KC Startup Village. The story has the details. The bottom line is that the speeds are so fast and the prices so low that people and organizations are willing to go to considerable trouble — relocation, opening of branches and/or changing launch plans — to take advantage.

While the audacity of the speeds being promised and the identity of the provider make this a special project, the idea of a non-traditional organization — i.e., non cable or telco — offering telecommunications services is not new. Municipalities often offer services, and the American Recovery and Reinvestment Act (ARRA) of 2009 — the stimulus — funded various broadband initiatives.

Google is a whole different ballgame, however. The company has the potential to more fully shift the balance to the non-traditional side, however. If the company delivers on the promises it is making and exports the service to other areas, the service platform landscape will forever be altered. The question will be simple: If Google can offer such services, why can’t Cablevision, Comcast, Verizon and all the others?

Indeed, the other players are paying attention. CNET has a post on The Wall Street Journal that Time Warner Cable and AT&T are asking for the same preferential treatment that Google reportedly got from Kansas City. (CNET has a link to the WSJ story, which resides behind a paywall.) The carriers are asking for a level playing field:

According to The Wall Street Journal, which obtained a copy of agreements on file with the city government, Google was offered everything from free office space to a team of government employees “dedicated” to the development of its Gigabit Internet service. In addition, the company is able to use all city “assets and infrastructure — including fiber, buildings, land, and computer tools” for free, the Journal has learned.

The merits of the claims notwithstanding, it’s fun to see a cable company ask for equality, considering it dominated video for decades based on being favored — via franchise awards — over potential competitors. Perhaps Kansas City is a one-shot deal, and other municipalities should be compelled to refrain from offering similar terms to Google if and when it brings its expansive offerings to their towns. In any event, the advantages will have to at least be suspended at some point: It is difficult to know if Google Fiber would thrive in the open market if it doesn’t carry the costs and other obligations of its competitors.

The next few months will be very interesting as residents of Kansas City play with their new toys — and the established telecommunications structured determines how big a headache Google will be.