Internet Overcharging schemes bring even more profits to a cable industry that already enjoys a 95% gross margin on broadband service.

At least one major national cable company plans to implement a usage-based billing system in the coming year, predicts Sanford Bernstein analyst Craig Moffett.  Bloomberg News quotes Moffett in a piece that thinly references Time Warner Cable as that operator, whose CEO strongly believes in further monetizing broadband usage.

Moffett is among the chief cheerleaders hoping to see operators charge customers additional fees for their use of the Internet.

“In the end, it will be the best thing that ever happened to the cable industry,” Moffett said.

For customers, DISH Satellite chairman Charlie Ergen predicts it will lead to at least a $20 monthly surcharge for broadband users who watch online video, which could bring already sky-high broadband pricing to an unprecedented $70-80 a month, the same amount most cable operators now charge for standard digital cable-TV service.

The cable industry’s interest in being in the cable television business has waned recently as subscribers increasingly turn away from expensive cable packages.  Now companies that used to consider broadband a mildly-profitable add-0n increasingly see Internet access as the new mainstay (and profit center) of their business.

Time Warner Cable, for example, wasn’t even sure its entry in the broadband business in the late 90s would ever amount to much.  Fast forward a dozen years, and it is an entirely different story:

“We’re basically a broadband provider,” Peter Stern, chief strategy officer for New York-based Time Warner Cable, said Nov. 17 at the Future of Television conference in New York. “As a convenience for our customers, we package and distribute television and provide service around that.”

Bloomberg reports the cable industry profit margin on broadband is nearly 95 percent, a testament to the lack of competitive pressure on Internet pricing.  The industry is going where the money is to make up for increasing challenges to their video business, which currently “only” brings them a 60 percent profit margin.

Suddenlink, already enjoying a 12 percent increase in broadband revenue in the last quarter alone, is implementing its own Internet Overcharging scheme, charging $10 for every 50GB a customer exceeds their arbitrary usage allowance.  That, despite the fact CEO Jerry Kent admits Suddenlink’s broadband margins are double those earned from the cable company’s video business.

Complicit in the parade to Internet Overcharging is Federal Communications Commission chairman Julius Genachowski, who publicly supported usage-based pricing in public statements made last December.  Cable operators were fearful Genachowski might lump the pricing scheme in with the Net Neutrality debate.  Providers have since used Genachowski’s loophole in an end run around Net Neutrality.  If providers cannot keep high volume video traffic from competitors like Netflix off their networks, they can simply make using those services untenable on the consumer side by increasing broadband pricing, already far more expensive than in other parts of the world.

That is a lesson already learned in Canada, where phone and cable companies routinely limit usage and slap overlimit fees on consumers who cross the usage allowance line.  Canada’s broadband ranking has been deteriorating ever since.

Moffett - The chief cheerleader for Internet Overcharging

Bloomberg says such a pricing regime would discourage investment in online video products that currently are held responsible for some cable cord-cutting:

“It’s the reason why Apple or Google would inevitably be reticent about committing a significant amount of capital to an online video model,” Moffett told Bloomberg. “You can’t simply assume just because you can buy the content more cheaply, you can offer a product that’s cheaper to the end user.”

The only way around this might be video providers like Google getting into the broadband business themselves, something Google is experimenting with in Kansas City.  Google’s “Think Big With a Gig” project is partly designed to prove gigabit broadband delivered over a fiber network is practical and doesn’t have to be unaffordable for consumers.  It will also finally bring competitive pressure on a comfortable broadband duopoly, at least for residents in one city.

So far, video providers who depend on an Internet distribution model are not putting much money in the fight against usage-billing.  Instead, companies like Netflix are releasing occasional press releases that decry the practice.

“[Usage billing] is not in the consumer’s best interest as consumers deserve unfettered access to a robust Internet at reasonable rates,” Steve Swasey, a Netflix spokesman, said previously.

It is clear consumers despise usage pricing.  In every survey conducted, a majority of respondents oppose limits on their broadband usage, especially at today’s prices.  But that may not be enough to get companies like Time Warner Cable to back off.  The company has reportedly been quietly testing usage meters since last summer.  CEO Glenn Britt, with a considerable drumbeat of support from Wall Street analysts like Mr. Bernstein, has never shelved the concept of usage pricing, seeing it more lucrative than hard usage caps.  The company retreated from a 2009 plan to charge up to $150 a month for flat rate access after consumers rebelled over planned trials in Texas, North Carolina, and New York.

But without a solid message of opposition from consumers, and an about-face from an FCC chairman that should know better, they’ll be back looking for more money soon enough.

[Thanks to regular Stop the Cap! reader Ron for sharing the news.]

Party time in Kansas City, Kansas

Kansas City, Kansas is creating some jealousy across the river in the much larger Kansas City, Missouri in reaction to Google’s announcement yesterday that it was bringing its 1 gigabit per second fiber to the home network to KCK.

Local bloggers called Google’s announcement “a game changer” for the city’s software developers and health care providers, who represent a large part of the city’s high tech economy. The announcement also thrilled local schools and universities, who will be able to deliver broadband service that rivals world leader South Korea in as little as one year from today.

Speculation about why Google chose the Kansas-based suburb of Kansas City has been rampant.  Among the biggest theories is that the local utilities, with whom Google must negotiate for space to accommodate its fiber cables, are owned by the local municipality, not private corporations.  With local government officials eager to cut red tape and avoid political or economic minefields which could delay the project, having public utilities as a partner may have made a decisive difference in the final decision.

The 'Kansas City' in the smaller type represents the Kansas suburb of the much larger Kansas City, Mo.

Demographics experts suggest Google might have chosen KCK because it represents classic middle-America with a growing digital economy — a perfect laboratory to watch what comes from ultra high speed Internet access.

The presentation by Google rivaled a glowing Hollywood production, one TV news team remarked.  Live-streamed on the web to a global audience, company officials vaguely promised the choice of KCK was the beginning of a potentially broader fiber network not just limited to a single Kansas city, although company officials seemed to restrain themselves out in the parking after the event, suggesting the network could be expanded regionally, saying nothing about other cities further afield.

Local newscasts told the Google story to Kansas City viewers in varying degrees of intensity, often relegated to pointless outdoor live stand up shots scattered around the city.  There isn’t much to show for a network that exists only in the form of a website.

A Silicon Valley expert echoed the sentiment that faster broadband can bring dramatic development to the communities that have it, sometimes in surprising ways.  It’s less about what one can do with 1Gbps service today and more about the possibilities for tomorrow.  But CNBC’s Jon Fortt added some applications may have only limited national appeal if the rest of the country lives with slower broadband service than cannot support the latest online innovations.

Still, excitement is easy to find among the journalists, local politicians, and other community members across the range of local news coverage.

It brings to mind just how ironic it is that a city like KCK will soon have some of the fastest broadband connections in the country while states like North Carolina are on the cusp of enacting legislation that will guarantee they will never be a part of the transformative broadband revolution — at least those who don’t live in Wilson or Salisbury.  Every member of the legislature in that state should watch and learn.

KSHB-TV Kansas City’s NBC station devoted the most time to Google’s arrival, including a special interview by satellite with CNBC reporter Jon Fortt, discussing the implications of 1Gbps broadband for KCK.  (11 minutes)

KCTV-TV Kansas City’s CBS affiliate spent more than five minutes in their newscast covering Google’s gigabit network, including interviews with a local blogger and health care expert.  (7 minutes)

WDAF-TV, the Fox station for Kansas City, emphasized what Google will do for area students in bringing faster, more reliable broadband to the region.  (7 minutes)

KMBC-TV, Kansas City’s ABC station, tries to explain what 1Gbps broadband represents with a water faucet.  The station’s coverage continues with the impact fiber broadband will have on local health care.  (4 minutes)

Google announced this morning it has chosen Kansas City, Kansas as the site of the search giant’s experimental 1Gbps fiber to the home service.

The announcement came at 12 Noon ET on Google’s blog:

After a careful review, today we’re very happy to announce that we will build our ultra high-speed network in Kansas City, Kansas. We’ve signed a development agreement with the city, and we’ll be working closely with local organizations, businesses and universities to bring a next-generation web experience to the community.

Later this morning we’ll join Mayor Reardon at Wyandotte High School in Kansas City, Kansas, for an event we’ll carry live on the Google YouTube channel—be sure to tune in at 10am PDT to watch.

In selecting a city, our goal was to find a location where we could build efficiently, make an impact on the community and develop relationships with local government and community organizations.

Google’s video talked a lot about bandwidth and the need for more of it.  While Google is striving to bring one gigabit access to ordinary consumers, other providers like AT&T are seeking to limit it.  The competition between cities looking for super high speed access was fierce, demonstrating Americans are hungry for better, faster, and unlimited broadband service.  Unfortunately, some of the country’s largest providers want to deliver the least amount of service possible for the highest price.

Google’s project is likely to call out more than a few providers, but until companies like Google can deliver real competition to America’s phone and cable broadband duopoly, only a handful of communities like Kansas City will exist as an oasis in the broadband desert AT&T wants to create across its middle-America service area.

Google released this video showcasing what its 1Gbps network will do for the people of Kansas City, Kansas.  (3 minutes)

Some 1100 communities will have to wait until next year to learn if they are among the one(s) chosen for Google’s new 1 gigabit fiber to the home network.

An announcement on Google’s official blog broke the news to anxious readers this morning:

We had planned to announce our selected community or communities by the end of this year, but the level of interest was incredible—nearly 1,100 communities across the country responded to our announcement—and exceeded our expectations. While we’re moving ahead full steam on this project, we’re not quite ready to make that announcement.

We’re sorry for this delay, but we want to make sure we get this right. To be clear, we’re not re-opening our selection process—we simply need more time to decide than we’d anticipated. Stay tuned for an announcement in early 2011.

Google has also been working on a “beta” network, serving 850 private homes and condominiums on the main campus of Stanford University, owned primarily by the faculty.

That a company the size of Google faces delays from the challenges involved in building a fiber-to-the-home network speaks to similar delays that often slow down municipal broadband deployments.  Community broadband critics often seize on such delays as evidence the networks are not viable and run by unqualified personnel.  But as Google illustrates, such delays are common whether they are run by private or public entities.

Google today launched a new website which could become a major advocacy center to promote fiber broadband service across America.

Google Fiber for Communities opened with a thank you message for the enormous number of submissions it received for its experimental 1Gbps fiber broadband network.  Google expects to announce the winning application(s) for its experimental  network sometime this year.

But in the meantime, Google also acknowledges what big telecom companies keep trying to downplay and dismiss — “people across the country are hungry for better and faster broadband access.”  That is… better and faster service than their current provider is willing to supply.

The new website provides hints as to its greater purpose:

1. The name itself.  Notice “communities” is plural.
2. The site intends to mobilize for fiber networks across the country, starting with lobbying for pending federal legislation that would require installation of fiber conduit as part of federal transportation projects.
3. The site’s links heavily promotes municipal broadband advocates and organizations, including the National Association of Counties, the National Association of Telecommunications Officers and Advisors, the Fiber to the Home Council, the Baller Herbst Community Broadband Page, the Broadband Properties Municipal Fiber Portal, and Muni Networks.  Outside of the Fiber to the Home Council, which has some big telecom company members and isn’t above advocating for their interests, the rest of the list suggests Google advocates that communities do for themselves what their local phone and cable companies won’t do — deliver world class broadband service at non-duopoly prices.

Stop the Cap! shares many of these goals with Google, as we are strong advocates for community fiber-based broadband, and believe additional competition is highly needed in America’s broadband marketplace to break up an anti-consumer duopoly that delivers slow broadband service (or none at all) at the highest prices companies can get away with.  Thanks to Stop the Cap! reader Jerry here in Rochester for sending word.

[Stop the Cap! will be closely following Google's experimental gigabit fiber-optic broadband network. We'll be bringing regular updates about the communities applying, the strategies they are using to attract Google's attention, what the competition thinks, and the impact of the project on American broadband.  You can read our earlier community profiles, and news about the project here.]

Topeka wants Google’s fiber experiment so badly, it is willing to rename itself to Google, Kansas — at least for the month of March, anyway.

Mayor Bill Bunten signed a proclamation Monday rechristening the city “Google, Kansas — the capital city of fiber optics.”

It’s all part of a well-organized effort to bring Google’s fiber optics to 122,000 residents living and working in the capital city of Kansas.

Think Big Topeka, a local group started by three people just a few weeks ago, was launched to promote Topeka as a candidate city.  It includes links to e-mail elected officials, complete Google’s online nomination form, and coordinate upcoming events.

It has since collected more than 10,000 Facebook fans and has gotten a big push from most of the local broadcast and print media, which have run more than a dozen stories about the group and the petition to nominate Topeka.  Several stations even have prominent links back to Think Big Topeka’s website.  The city government is also an enthusiastic supporter of the experimental project.

Think Big Topeka knows how to get media attention.  The group recently started running “flash mobs” — events where hundreds of people silently promote the project by suddenly stripping off jackets to uncover T-shirts promoting the Think Big Topeka campaign.  Engineering events that are “made for television” guarantee plenty of attention on the evening news.

The Google “Think Big With a Gig” experiment has excited communities from coast to coast, convinced advanced fiber optic networks will bring new jobs, high technology business, and improved broadband service for both consumers and area businesses.  Many hope the competition will also finally lower prices.

Incumbent providers Cox Cable and AT&T are the largest local providers.

Cox currently offers three broadband tiers — Essential 3 Mbps/384 kbps ($29.99), Preferred 12/1.5 Mbps ($46.99), and Premier 25/2 Mbps ($61.99).

Cox Cable, when asked by KSNT-TV news what they thought about the project brought a response from Kelly Zega, a representative from Cox Communications: “We have always believed competition in the marketplace is a healthy thing, as it leads us all to improve and innovate in ways that ultimately benefit consumers.”

AT&T offers U-verse in selected areas of Topeka, but most areas are still served by AT&T’s traditional DSL service which offers considerably slower speeds — Basic 768/384 kbps ($19.95), Express 1.5 Mbps/384 kbps ($24.95), Pro 3 Mbps/512 kbps ($24.95), or Elite 6 Mbps/768 kbps ($24.95).  (Note the prices for Express, Pro, and Elite are identical — apparently which plan you get depends on what actual speeds AT&T is capable of delivering to your home.)

If Google can deliver faster speeds and lower prices, it’s no surprise thousands of Topekans are excited.

The Topeka Capital-Journal, the community’s daily newspaper, is also promoting the project on its editorial pages:

This excitement is being created by a lot of people who see opportunities to help the city grow and become an even better place to live, and are determined to do everything they can to make it happen.

Evidence of their enthusiasm and dedication was on display Thursday evening when about 500 of them gathered at the Ramada Hotel and Convention Center to talk about plans to revitalize downtown Topeka. Granted, the audience consisted of two different groups, but each had visions that, if fulfilled, would mean great things for our city.

We’ve written recently in support of Think Big Topeka, a group trying to convince Google that Topeka is the place to test an ultrafast Internet connection that promises to provide Internet service about 100 times faster than anything we are working with now. The effort has attracted about 7,875 supporters in a very short time and some of them turned out for Thursday’s meeting, sponsored by Heartland Visioning, to encourage others to jump on the bandwagon.

Supporters of the Google project and those interested in revitalizing downtown meshed during the evening as the discussion flowed between both issues.

Such a confluence of people and organizations with visions, dreams or plans — call them what you will — is a healthy, and welcome, development itself that bodes well for the city’s future. Most good things start with someone’s vision or dream, and they aren’t to be scoffed at or dismissed out of hand.

Think Big Topeka has more than 10,000 fans on its Facebook page

Dreams can come true… if a city actually applies.  The city of Topeka will.

“The city of Topeka welcomes the opportunity to participate in this unique technological experiment, if selected as Google trial community, to benefit our citizens in providing all opportunities to access Internet technologies,” city officials wrote on the city’s Facebook page.

The city’s information technology department has been tasked with working on what they characterized as a very long and detailed application.  Mark Biswell, IT director for Topeka city government, said his department has been hard at work on the application from the moment Google announced the project.

Shawnee county, which includes Topeka, is conducting an online  survey running until Saturday asking residents about their interest in the Google fiber project.  They are seeking input on what kinds of broadband speeds residents actually obtain, instead of relying on marketing promises made by the incumbent providers.  They also want to learn how satisfied residents are with Cox and AT&T.

For Topeka, a city coincidentally working on its own revitalization plan for downtown development, the prospect of Google gigabit fiber could be the crown jewel of a complete city makeover.

KTKA Topeka aired three reports about the Google fiber experiment, including an interview with one of the founders of the Think Big Topeka group. (3 minutes)

http://www.phillipdampier.com/video/WIBW Topeka Group Wants Google's Blazingly-Fast Internet To Come To Topeka 2-17-10.flv

WIBW Topeka has these two reports featuring the Think Big Topeka group and how the city government is involved in the project.  (4 minutes)

http://www.phillipdampier.com/video/KSNT Topeka City Renames Itself Google for March 3-1-10.flv

KSNT Topeka has several reports about the organizing effort, a “flash mob” and Topeka city government’s strong belief in the project.  (6 minutes)

http://www.phillipdampier.com/video/Think Big Topeka.flv

Finally, Think Big Topeka has some of its own videos on offer, answering residents’ questions and cheerleading the effort to bring better broadband to Topeka.  (3 minutes)

[Stop the Cap! will be closely following Google's experimental gigabit fiber-optic broadband network.  We'll be bringing regular updates about the communities applying, the strategies they are using to attract Google's attention, what the competition thinks, and the impact of the project on American broadband.]

Columbia, Missouri is excited about the prospect of being chosen as a test city for Google gigabit broadband.

It’s just one of tens of communities seeking to apply for Google’s new experimental fiber to the home network delivering super fast broadband to residents and businesses.

Columbia is the fifth largest city in the state, with 100,000 residents who call the heart of mid-Missouri home.  Columbia is a classic college town, supporting the University of Missouri.  It’s uniquely known as one of the most-educated communities in the country, with over half of its residents holding college degrees.  Columbia residents are quick to embrace new technology, and this drive to adopt the latest and the greatest has fueled interest in Google’s fiber network.

Columbia’s Regional Economic Development, Inc. (REDI), promoting local business and economic development, has been coordinating what to do next.  They’ve been joined by ComoFiber, which is working to generate public interest in the project and help devise a strategy to win Google’s attention.

Columbia, Missouri

Mike Brooks, from REDI, said the city has seen a great deal of interest from the community to apply for Google’s plan.

Last week, both groups met to educate the public and start identifying why Columbia poses an attractive place for Google’s project.

Some believe Columbia would be the ideal city to build such a network.  ComoFiber explains:

The reasons are numerous, but the biggest reason is really quite simple: Columbia is on the knife’s edge: the sweet spot between big, highly-developed cities and small, under-served towns.

The reason this is so important is because it’s easy to see why Google might want to deploy its fiber in either a big city or a small town, but it’s equally easy to see why they wouldn’t. The big cities have high-tech industry, universities, highly educated populae and other capabilities that allow them to produce the kind of applications and creative products that Google wants to research. On the other hand, major cities already have a great deal of fiber infrastructure, and their broadband prices are generally reasonable. So really, they’re already enabled; adding marginally-faster service to those markets won’t be the kind of sea-change that the plan is designed to study.

ComoFiber compiled a list of strengths from both the “big city” and “small town” perspective:

Columbia/Boone County, Missouri

Columbia as Big City:

1. Multiple colleges and universities, including world-class research facilities.
2. A major life sciences epicenter. Life-science is perhaps the most data-intensive industry in the world.
3. A highly-educated, technically-skilled populace. Thirteenth-most educated in America, to be exact.
4. Many high-tech small businesses, including Internet-centric outfits such as Newsy.
5. Several major hospitals and health care businesses, including some at the forefront of technological advancement.
6. Small-business incubators run in cooperation with universities and the city.
7. The world’s foremost journalism school and the Donald W. Reynolds Journalism Institute, which houses a state-of-the-art Technology Testing Center.
8. Several existing Internet service providers who can take advantage of this new open network.
9. Excellent data backhaul capability due to our position on the I-70 corridor.
10. With over 100,000 people, the population is high enough to meet Google’s goal for project scale.

Columbia as Small Town:

1. Sub-par broadband performance with high prices.
2. Very little existing fiber-to-the-home infrastructure.
3. High tariffed rates for enterprise-class data products (T1, DS3, etc.)
4. Midrange population density should be a good microcosm for suburbia nationwide.
5. Smaller building development (no high-rises) makes infrastructure deployment simpler.
6. ”The District” contains the kind of mom-and-pop small-town businesses that can innovate unencumbered by corporate imperatives.
7. Frequently listed in “best places to live” compilations, such as that of Money Magazine.
8. Location in the heart of middle America sends a powerful symbolic message.
9. Low cost of living will be nice for the employees Google will need to move in.
10. With only a bit over 100,000 people, the population is low enough not to dwarf Google’s goal for scale.

The incumbent cable operator, Mediacom, can’t understand why there is such excitement over Google’s fiber project.

“Google is going to be in select markets, and it’s kind of a test that they’re rolling out,” Mediacom director of operations Bryan Gann told KOMU-TV in Columbia. ”It may be limited to some commercial applications in the beginning.”

Mediacom is Columbia's incumbent cable company

Mediacom doesn’t think most residents have any need for super fast broadband.

“I think when you get up to those higher speeds that fast, it’s a select group that would even be interested in it going at that speed,” Gann said.

Despite that remark, Gann quickly added Mediacom was already providing the fastest broadband access in town.  In early February, Mediacom boosted its top broadband speed to 50Mbps, and Gann says the company already has plans to boost that speed to 100Mbps in the future.

“We’re already supposed to go to 100, so we can press on the accelerator anytime we want to,” Gann said.

When a new fiber-based competitor threatens to arrive in town, most cable companies downplay the competitive threat.  Mediacom was no exception.

Gann told KOMU Mediacom was used to competition in broadband service and doesn’t see Google Fiber as a threat.

“With the technology that the cable industry put into Columbia, we’re ready to increase our speed to match competition,” Gann said.

http://www.phillipdampier.com/video/KOMU Columbia Faster Internet May Reach Mid-Missouri 2-16-10.flv
KOMU-TV talks about Columbia’s prospects as a chosen city for Google’s new fiber-to-the-home experiment. (2/16/10 – 1 minute)

Frontier's headquarters in Rochester, N.Y.

Frontier Communications has dismissed the proposition of Google constructing a 1Gbps fiber-to-the-home network, telling readers of the Rochester Democrat & Chronicle that most users don’t need ultra-fast Internet access.

Ann Burr, chairman and general manager of Frontier Communications of Rochester made the remark in response to news that citizens and business leaders are excited about promoting Monroe County as a potential test location for Google’s fiber network experiment.

Frontier, which serves Rochester and most of the 585 area code, accused Google of having “a poor track record of following through on such proposals and that creating a fiber-optic network from scratch would be enormously expensive.”

Pot to kettle.  Frontier’s illusory promises for fiber optic connectivity in states like West Virginia, where it seeks to take over the majority of the state’s phone customers from Verizon, never seem to include specific assurances such projects will reach customer homes.

“If Google built its own network, we estimate it would cost $5,000 per household,” Burr told the newspaper.

That’s as exaggerated as Frontier’s DSL speed claims.

Verizon Communications, which is in the business of providing fiber connectivity to the home, disclosed the true costs are far lower than that, and continue to decline.  In the summer of 2008, Verizon’s Policy Blog noted:

Capital Costs
– We said our target per home passed was $700 by 2010, and we are ahead of plan to achieve that objective. In fact, we’ve already beaten the target.
– We said our target per home connected was $650 by 2010, and we’re on plan to hit that target.

No wonder Frontier doesn’t contemplate providing fiber service to customers.  It created its own sticker shock.

Still, the local phone company didn’t want to slam the door entirely on Google’s foot, suggesting it would be willing to talk about leasing space on Google’s network if it launched in the Flower City.

Frontier’s claim that customers don’t believe fast broadband service is important is a remarkable admission, particularly for a company that increasingly depends on broadband service to stop revenue loss from customers dropping traditional phone lines.  That philosophy should be carefully considered by state officials and utility commissions reviewing Frontier’s proposal to take over Verizon phone lines in several states.  Do communities want to receive broadband from a company that dismisses faster broadband speed as irrelevant for the majority of its customers?

Perhaps the remarks came with the understanding Frontier isn’t capable of delivering 21st century broadband speeds over its antique network of copper telephone wire anyway.

That’s the point Time Warner Cable has made repeatedly, especially in the Rochester metro area.  The cable operator routinely promotes its Road Runner cable modem service’s speed advantages over Frontier’s DSL product.  Frontier promises up to 10Mbps, but often manages far less (3.1Mbps was my personal experience with Frontier DSL last April.)  Time Warner Cable promises up to 15Mbps, and often exceeds that with its “PowerBoost” feature.  In rural areas, the phone company tops out at “up to 3Mbps.”  Time Warner Cable notes most of its new broadband customers come at the expense of phone companies like Frontier.  DSL customers switch because they do care about broadband speed.

Judging from the excitement in Rochester over Google’s proposal, Frontier’s dismissal of a fiber optic future seems out of touch, and potentially a drag on the local community’s economic future.

Rochester increasingly will become a broadband backwater because of anemic broadband competition from Frontier Communications.  Its reliance on ADSL technology, more than a decade old, to deliver distance-sensitive broadband service looks out of place compared with the rest of New York State.  Major cities throughout New York are being wired with fiber optic service by Verizon Communications.  Verizon FiOS delivers up to 50Mbps service.  Frontier maxes out at far lower speeds and defines an acceptable amount of broadband usage on its DSL service at just 5GB per month. Using Verizon’s FiOS fiber network, you’d exceed Frontier’s entire month’s ‘allowance’ in less than 15 minutes at Verizon’s speeds.

Rochester is one of many communities challenged by the transition away from a manufacturing economy towards a high technology future.  A world class fiber optic network doesn’t just benefit big business.  It spurs revolutionary growth in medicine, education, software development, telecommunications, and more.  That means good paying jobs.  For consumers with fiber to the home, it opens the door to telecommuting on a whole new level, distance learning opportunities, new ways to access information and entertainment, and allows home-based entrepreneurs to develop new businesses.

With Verizon FiOS unavailable to Rochester indefinitely, and Frontier unwilling to make appropriate investments to keep this city competitive with the rest of upstate New York, those jobs and economic benefits can go to Buffalo, Syracuse, Albany, Westchester County, and metropolitan New York City.  We’ll be held back on the frontier with Frontier and its ideas of rationed broadband service.

WROC-TV in Rochester reports that Ontario County, to the southeast of Rochester, may have a built-in advantage with an already-installed fiber loop covering much of the county.  The county has a team working on a formal application to Google to provide service in communities like Geneva and Canandaigua.  Frontier’s claims that consumers don’t care about fast broadband speed are belied by the excitement of residents of both counties. (2 minutes)

Google plans to offer up to 1Gbps service on its direct to the home fiber network

Google has announced it is doing something about anemic, overpriced, and poorly supported broadband service in the United States.  It’s going to start providing service itself.

In a move that is sure to drive providers crazy, Google is looking for your nominations for communities that are stuck in broadband backwaters, desperate for an upgrade.  With so many suffering from “good enough for you” broadband speeds, threats of “inevitable” Internet Overcharging schemes like usage limits and consumption billing, or customer support that involves reaching more busy signals than helpful assistance, they won’t have to beg for nominations.

Google is planning to launch an experiment that we hope will make Internet access better and faster for everyone. We plan to test ultra-high speed broadband networks in one or more trial locations across the country. Our networks will deliver Internet speeds more than 100 times faster than what most Americans have access to today over 1 gigabit per second, fiber-to-the-home connections. We’ll offer service at a competitive price to at least 50,000 and potentially up to 500,000 people.

From now until March 26th, we’re asking interested municipalities to provide us with information about their communities through a Request for information (RFI), which we’ll use to determine where to build our network.

I can think of a few cities that were victimized by providers in 2009 who have little chance of seeing true fiber optic service any other way.  Rochester, New York, the Triad region of North Carolina, parts of San Antonio and Austin bypassed by Grande Communications’ fiber network, are all among them.  Rochester has the dubious distinction of being stuck with two providers itching to slap usage limits and consumption billing on their customers – Frontier and Time Warner Cable.  Since Verizon FiOS is popping up all over the rest of New York State, residents in the Flower City concerned about being left behind might want to make their voices heard.

Google plans to deliver 1Gbps… that’s a Gigabit — 1,000Mbps service to its fiber customers at a “competitive price.”

While some in the industry consider such speeds irrelevant to the majority of consumers, Google thinks otherwise:

In the same way that the transition from dial-up to broadband made possible the emergence of online video and countless other applications, ultra high-speed bandwidth will drive more innovation – in high-definition video, remote data storage, real-time multimedia collaboration, and others that we cannot yet imagine. It will enable new consumer applications, as well as medical, educational, and other services that can benefit communities. If the Internet has taught us anything, it’s that the most important innovations are often those we least expect.

What’s in it for Google?  Targeted advertising, guaranteed open networks, an improved broadband platform on which Google can develop new broadband applications, and calling out providers’ high profit, slow speed broadband schemes are all part of the fringe benefits.

For providers and their friends who have regularly attacked Google for “using their networks for free,” Google’s fiber experiment deflates providers’ hollow rhetoric, and could finally provide a warning shot on behalf of overcharged, frustrated consumers that the days of rationed broadband service at top dollar pricing may soon be over.

Google released this video announcing their Think Big With a Gig campaign (1 minute)

This isn’t Google’s first experience with being an Internet Service Provider.  The company has experimented with free Google Wi-Fi service in its hometown of Mountain View, California since 2006.

[Update 2:30pm EST: FCC Chairman Julius Genachowski applauded Google's experiment: "Big broadband creates big opportunities," he said in a statement. "This significant trial will provide an American testbed for the next generation of innovative, high-speed Internet apps, devices and services."

The Washington Post has a source that claims Google "doesn't currently have plans to expand beyond the initial tests but will evaluate as the tests progress."  That could mean the experiment also serves a public policy purpose to re-emphasize Google's support for Net Neutrality, and to deflate lobbyist rhetoric about Google's support for those policies being more a case of their own self-interest and less about the public good.  If Google can run its networks with open access, they essentially put their money where their public policy mouth is.]