AT&T suddenly announced it was ready to build its own gigabit fiber network in Austin.

AT&T and Time Warner Cable report they are ready to make more investments in their operations in Austin, Tex. to compete with Google Fiber when it arrives in the middle of next year.

Time Warner Cable says it already operates a multi-gigabit fiber optic network — one residential customers cannot easily access or afford. Residential broadband speeds at the cable operator top out at 50/5Mbps in Austin, at a cost higher than what Google plans to charge for 1,000/1,000Mbps service. AT&T’s U-verse network maxes out at 24/3Mbps, assuming customers have good copper wiring between AT&T’s fiber in the neighborhood and their home.

“The cable and phone company providers have purposely confused their networks’ maximum speed capacity with real end-user speeds for years, and when that fails to convince they simply claim customers don’t need or want those speeds anyway,” says Stop the Cap! reader and Austin resident Sam Knoll.

Knoll is enthusiastic about giving Time Warner Cable the boot, partly to pay them back for their aborted consumption billing trial attempted in Austin in 2009.

“I am not completely convinced Time Warner Cable understands just how much damage they did to their reputation when they pulled that stunt, and I’m certain they will attempt it again if they have a chance,” Knoll said. “The best thing customers can do is switch to a provider that believes usage caps and consumption billing are the fraudulent ripoff we know them to be. Google already knows this.”

Some Time Warner Cable customers in Austin never forgot the company tried to meter Internet usage in a failed experiment back in 2009. (Image: The Austinst)

Competition from deep-pocketed Google could eventually transform the broadband business model for American providers, assuming Google builds its fiber network in enough cities to challenge the conventional wisdom that prices have plenty of room to grow with faster Internet access. The more customers that sign up for Google’s already-super-fast broadband, the more providers will have to compete with better and faster service.

But AT&T is not convinced. The company announced yesterday it was prepared to build a gigabit fiber network not just in Austin, but also in surrounding Williamson County, with plenty of caveats.

“[We will only build the network if] the demand is there and if we get the same terms and conditions as Google received,” said AT&T spokeswoman Tracy King.

AT&T told the Austin American-Statesman the company wanted a faster regulatory approval process and permission to only build its faster fiber network in neighborhoods where there is proven demand for the service. Current franchise agreements often compel providers to offer service throughout the community and prohibits “cherry-picking” customers in high-income or low construction cost areas.

An AT&T official told KEYE-TV he had no idea how much AT&T would charge for gigabit broadband. Google charges $70 a month in Kansas City.

Austin has promised cooperation with Google, although it is not extending tax breaks or grants to the search engine giant. Google will get easy access to Austin Energy’s municipally owned infrastructure including utility poles and rights-of-way.

Google is speculated to be building showcase fiber networks to embarrass incumbent cable and phone providers who typically sell standard broadband service with speeds of 6-15Mbps in most larger communities. Rural areas are lucky to have 3Mbps service, and often much less.

But if Google intended to force major upgrades by cable and phone companies across the country, it might be disappointed with the response so far from AT&T and Time Warner Cable. Both companies indicate they will invest in and upgrade their networks to compete, but only in the service areas where Google-style competition exists. For the rest of the country, phone and cable companies are prepared to continue with the current “broadband scarcity” business model that delivers upgrades only occasionally, often accompanied by usage limits, consumption billing, and/or higher prices.

“Google has proved that there is a business model for selling abundant bandwidth as opposed to a business model for allocating scarce bandwidth,” said Blair Levin, a former chief of staff of the Federal Communications Commission.

“They are saying this is not an experiment. It is a business,” Levin told the newspaper. “In Kansas City, Google did the country an enormous favor. They said, give us regulatory flexibility to design the business and give us access to city property so we can build a network to lower the cost.”

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KEYE in Austin talks with AT&T about their plans for a gigabit broadband network to compete with Google Fiber. The AT&T spokesman seemed more interested in pitching the company’s deregulation agenda and was short on specifics.  (3 minutes)

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KXAN in Austin talked with Google competitors Time Warner Cable and AT&T about how they will respond to the Google Fiber challenge.   (3 minutes)

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KVUE in Austin called Google’s entry into the city the opening salvo of ‘Fiber Wars,’ as AT&T promises its own gigabit network. Austin residents intend to take advantage of the competition to force providers to give them better deals to keep their business.  (3 minutes)

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KXAN explains the possibilities of gigabit fiber, but also asks a former Google insider why the search engine is getting into the broadband business.  (5 minutes)

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KTBC was skeptical of AT&T’s sudden interest in gigabit broadband. “Gee, what a coincidence,” commented the anchor of Austin’s Fox affiliate.  (2 minutes)

On the heels of today’s announcement from Google that it intends to make Austin, Tex. the next home for Google Fiber, AT&T issued a press release claiming it was suddenly interested in building a gigabit fiber network in Austin too.

Today, AT&T announced that in conjunction with its previously announced Project VIP expansion of broadband access, it is prepared to build an advanced fiber optic infrastructure in Austin, Texas, capable of delivering speeds up to 1 gigabit per second.  AT&T’s expanded fiber plans in Austin anticipate it will be granted the same terms and conditions as Google on issues such as geographic scope of offerings, rights of way, permitting, state licenses and any investment incentives. This expanded investment is not expected to materially alter AT&T’s anticipated 2013 capital expenditures.

Currently, AT&T’s U-verse system in Austin — a fiber to the neighborhood system — cannot exceed 25Mbps as it is now configured. GigaOm’s Stacy Higginbotham reports AT&T told her it would build its own fiber to the premises system in Austin to support faster speeds.

But AT&T’s announcement does not come without plenty of wiggle room which could make today’s announcement little more than a publicity stunt:

1. AT&T claims it will build “infrastructure” capable of delivering “up to” 1Gbps. This could mean a network that supports a maximum of 1Gbps of shared Internet traffic, not 1Gbps to each home or business;
2. AT&T does not say it intends this network for residential customers, nor did it suggest a monthly price for gigabit service. Its Project VIP expansion describes planned broadband speed upgrades for residential U-verse customers of up to 75Mbps and for U-verse IPDSLAM to speeds of up to 45Mbps, not 1Gbps;
3. AT&T’s Project VIP already specifies fiber network build outs, but they are destined for cell towers, large business complexes, and multi-dwelling units that will share a fiber connection;
4. AT&T wants the same terms and conditions Google has received, including investment incentives. But AT&T could have applied for those incentives, and potentially could have already received them, if it specified plans for a gigabit network of its own. Instead, AT&T executives have always believed residential customers do not want or need gigabit broadband speeds. In fact, AT&T still doesn’t believe fiber to the home service makes economic sense, which is why it invested in a cheaper fiber to the neighborhood system that still relies on old copper wiring. AT&T also warns that, “Our potential capital investment will depend on the extent we can reach satisfactory agreements” with local officials on those incentives;
5. Wiring a city of Austin will cost tens of millions to reach every resident with service. Such an expense might be considered materially relevant to shareholders, requiring disclosure. Building a much lesser network, like a gigabit middle mile network or only offering fiber service to institutional or commercial customers would cost far less and could escape reporting requirements.

AT&T also did not miss an opportunity to promote its deregulatory agenda, which has so far not proved to be of much help to broadband speed enthusiasts stuck with DSL or U-verse.

“Most encouraging is the recognition by government officials that policies which eliminate unnecessary regulation, lower costs and speed infrastructure deployment, can be a meaningful catalyst to additional investment in advanced networks which drives employment and economic growth,” said Randall Stephenson, AT&T chairman and CEO.

AT&T’s agenda might result in a meaningful catalyst of a different kind — the end of rural landline telephone and broadband service.

Austin’s television news has gone all out for Google Fiber, which is being unveiled today at a press event. Stop the Cap! will have coverage of the announcement, but in the meantime, here is a roundup of local coverage about Google Fiber in Austin:

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Austin’s local Fox affiliate KTBC reports city officials stayed tight-lipped about Google Fiber, but Google may have previewed its intentions by adding The Longhorn Network to its television lineup several months ago. Local technology experts say the upgrade is worth the wait and will be a boon to Austin’s economy. (2 minutes)

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Now that Austin will get Google Fiber, how long will residents have to wait to sign up? Mid-2014 is the estimate. KXAN explored how Google was unveiled in Kansas City. The station also took a look at other cities with gigabit fiber networks, many of them publicly owned alternatives to big phone and cable companies. KXAN compares the cost for 1,000Mbps service in different cities around the country. (3 minutes)

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KEYE notes Gov. Rick Perry is showing up for this morning’s unveiling of Google Fiber. In between some minor technical glitches in the report, some viewers say they are ready to sign up for $70 gigabit Internet now, just to stick it to Clearwire ($50 a month) and Time Warner Cable.  (2 minutes)

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KVUE says Google Fiber could boost Austin’s economy by luring even more high-tech companies. It could also stop Time Warner Cable and AT&T from trying more Internet Overcharging schemes on area customers.  (2 minutes)

Austin, Texas is likely the next Google Fiber city.

Austin, Texas will be the second major U.S. city to receive Google Fiber’s 1,000/1,000Mbps service, perhaps as early as 2014.

A “major announcement” at a news conference scheduled for Tuesday morning is expected to bring more than 100 community leaders together to hear Google’s plans for the city.

Local media reports, an accidental mention of Austin as the next Google Fiber city on Google’s Fiber Blog, and at least one confidential source at Austin’s public utility company (that owns the poles Google Fiber will be strung across) makes it all-but-certain Austin and its nearby suburbs will get the service.

Austin would seem a natural target for Google as home to the high-tech South by Southwest. Austin also hosts Dell, Texas Instruments, AMD, Samsung, IBM, Intel, and a myriad of Internet start-ups. But a key factor for Google also seems to be the presence of Austin Energy, the nation’s 8th largest community-owned electric utility, serving more than 420,000 customers and a population of almost one million. Kansas City, the first choice for Google Fiber, also has a municipal utility company.

Milo Medin, Google’s vice president of access services, made it clear that Google is targeting cities where it does not have to deal with intransigent privately owned utility companies that make life difficult (or expensive) to attach Google Fiber to utility poles. Municipally owned providers have proved easier to work with, and in Kansas City elected officials also helped cut through administrative red tape and facilitated a working relationship between Google and government officials responsible for issuing work permits and clearing up zoning headaches.

Areas served by investor owned electric giants like Southern California Edison, Florida Power & Light, Commonwealth Edison, Consolidated Edison, Georgia Power, Dominion Resources, Detroit Edison, Public Service Enterprise Group, and others may be at an immediate disadvantage in the race to become the next Google Fiber city if those companies attempt to throw expensive roadblocks or disadvantageous bureaucracy in front of Google.

Another factor in Kansas City’s favor was the large amount of pre-existing conduit available to pull fiber infrastructure through without tearing up streets. Cities with this type of infrastructure already in place dramatically reduces construction costs and permit delays.

Google Fiber’s project in Austin will compete directly with Time Warner Cable and AT&T U-verse. Time Warner Cable customers antagonized Austin residents in the spring of 2009 with a planned market test of consumption billing and usage caps for its Internet service. Google Fiber makes a point to say its broadband service is never usage-limited. AT&T U-verse customers in Austin have so far  not faced punitive measures from the phone company when exceeding its 250GB U-verse usage cap.

Many cable industry analysts predicted Google Fiber was simply a show project in Kansas City, designed to embarrass the telecommunications industry’s mediocre and expensive broadband service offerings. But a move into Austin signals Google more likely sees its fiber network as a lucrative business opportunity — one that could gradually be expanded to other cities.

What communities could get the service next? Google seems likely to avoid serving areas covered by Verizon FiOS, because competing fiber networks would likely not produce the bang for the buck Google needs to draw subscribers, and Medin makes it clear the company has found working with publicly owned utility companies easier than privately owned ones, so future Google Fiber cities will likely have these factors in common:

Having a publicly owned utility helps.

• A high-tech business community and well-educated workforce in a medium to large city;
• A publicly owned municipal utility willing to work with Google;
• Pre-existing infrastructure to support fiber service without tearing up streets and neighborhoods;
• A local government willing to cut red tape and ease Google’s expansion;
• No Verizon FiOS fiber service in the immediate metropolitan area;
• A reasonable level of regulations covering environmental impacts of utility infrastructure work, permits, and licensing.

Such requirements would wipe out almost all New York (except Rochester, Binghamton and the Southern Tier around Ithaca — all completely bypassed by Verizon FiOS) and New Jersey as possible candidates. California outside of Mountain View would also seem untenable because of government regulations, sprawling cities, and private utilities. Florida and Georgia have two major private power companies to contend with as well. But there are opportunities in Texas, the Carolinas, Minnesota, Washington, Arizona, Colorado, Tennessee, Massachusetts, and across several midwestern states, especially those served by AT&T’s inferior U-verse system.

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KXAN in Austin spent almost seven minutes of its weekend evening newscast talking about forthcoming Google Fiber in Austin.  (7 minutes)

The city of Olathe, Kansas will be the next home for Google Fiber, according to an announcement published yesterday on the Google Fiber Blog.

The Olathe City Council unanimously approved an agreement to wire the city for the benefit of its 127,000 residents, located 20 miles southwest of Kansas City.

This is the first expansion of Google Fiber outside of the immediate Kansas City area, but unlikely to be the last.

Rich Greenfield from BTIG Research predicts Google will likely announce a second major city for its fiber network sometime this year. Olathe doesn’t qualify at that city because it technically within the greater Kansas City metropolitan area.

The agreement with the Olathe City Council also includes permission to build a city-wide Wi-Fi network.

Google noted the city’s willingness to cut red tape and to ease the introduction of the service were partly determining factors. Google earlier cited the importance of having a smooth working relationship with utility companies and local government officials that make fiber installation a lot easier.

Comcast will be Google’s largest competitor in the city.

“We think that fiber and widespread Internet access will help to create jobs, grow local businesses, and make Olathe even stronger as it grows,” said Rachel Hack, community manager for Google Fiber. “We still have a lot of planning and engineering work to do before we’re ready to bring fiber to Olathe. Once we get those processes underway, we’ll be able to announce more about pre-registration and construction timing.”

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KCTV in Kansas City reports the Olathe City Council unanimously approved the entry of Google Fiber into the community of 127,000.  (2 minutes)

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KMBC in Kansas City notes Olathe is Kansas’ fastest growing city, but Google’s decision is leaving residents of larger cities like Overland Park feeling left out. But Olathe already has a lot of pre-existing fiber installed independent of Google, making it easier to provide service.  (2 minutes)