Google Fiber: Modern technology, but obsolete policy thinking

Scott Cleland Contributor
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The contrast was stark. Google, in launching its 1 Gigabit Google Fiber pilot in Kansas City last week, trumpeted a modern broadband technology vision of super-fast networks, but incongruously bundled it with an obsolete broadband policy vision of heavy government subsidies and regulation of networks.

In its Google Fiber announcement, Google strongly contrasted that two of the three technology legs of the Internet stool, computing power and storage, have enjoyed exponential increases in efficiency and productivity, while the third technology leg — bandwidth — has lagged far behind the other two. However, Google completely ignored the primary cause of that performance divergence, the fact that the tech sector’s computing and storage has never been regulated, while the communications sector has been regulated for about a century. Moreover, Google has described itself as the leading company advocating for regulation of the seven-year-old unregulated broadband (bandwidth) sector.

Google conveniently ignored that under the thumb of FCC regulation: telephone service changed little in fifty years (1934-1984); the  cell phone took 33 years to get to market (1949-1982); Internet packet-switching technology took 25 years to be commercialized (1969-1994); and the PC modem took 25 years to be broadly commercialized (1977- 2002). (There’s no mystery why bandwidth technology has so badly lagged computing power and storage technology; its obsolete law and stifling regulation.)

In touting the benefits of Google Fiber, Google hid the taxpayer-subsidies Google extracted from the City, because the agreement amazingly gagged the City from making any statement not pre-approved by Google. So when Google Fiber announced its pricing, no one mentioned the effective price-subsidies that Google received that are not available to its competitors.

Specifically, the agreement with Kansas City gifts Google with: free central office space; free power; no charge for access to the City’s assets and infrastructure; no charge for rights of way, permits and inspection fees; settlement-free interconnections with anchor institutions; free marketing and direct mail, and even free office space for Google employees. Apparently, Google Fiber is also exempt from the regulations and costs imposed on its competitors. Simply, Google secretly has shifted much of the cost of its business to the Kansas City taxpayer.

In criticizing lagging bandwidth performance, Google conveniently ignored all the broadband regulation Google has proposed and lobbied for over the last several years. Google boasts it “has been the leading corporate voice on the issue of net neutrality over the past five years.” As for the FCC’s Open Internet Order mandating net neutrality regulations despite no documented problem to solve, Google promised “No other company is working as tirelessly for an open Internet.”

In the development of the FCC’s National Broadband Plan, Google recommended a greatly expanded Federal role in, and funding for, broadband deployment. Moreover, Google promoted reclassifying unregulated broadband service as a Title II common-carrier-regulated telephone service to empower the FCC to advance top-down Government-control of broadband networks.

Concerning wireless broadband, Google successfully championed preemptive open access regulation of some auctioned spectrum in the 700 MHz auction in 2007, which created billions of dollars in implicit taxpayer subsidies. And just this month, Google and others recommended a radical change in Federal wireless policy. They recommended stopping the clearing of Federal Government spectrum for public auction according to law, in order to promote “sharing” of a 1,000 MHz of government spectrum with businesses. Such an executive order, would ignore Congress and the law, and give a potential effective taxpayer-subsidy to Google and others of over a hundred of billion dollars in foregone spectrum auction revenues going forward.

Lastly, in hyping Google Fiber’s 1,000 Mb per second offering as being “100 times faster than today’s average broadband,” Google ignores that consumers can buy 300 Mpbs broadband in the marketplace today from Verizon (and soon from Comcast and others), and that consumers choose not to buy faster available speeds because they do not yet see their utility or value. Thus “100 times faster” is a misleading apples-to-oranges comparison of Google’s only super-fast speed offering to the lower-speed tier offerings consumers have chosen to buy. Tellingly, Google also ignores that Verizon and Cable Labs are already working on delivering bandwidth performance ten times faster than Google Fiber. Competition works.

In sum, Google is right about the importance of continued modernization of America’s broadband networks to enable bandwidth performance to catch up with computing power and storage capability — in order to fuel America’s innovation, growth and productivity long term. However, Google is dead wrong in recommending obsolete law and heavy Government broadband regulations and subsidies to achieve it.

Simply, the solution to this important problem is to modernize obsolete communications law so the communications marketplace can become like the technology free-market of today.

Scott Cleland is Chairman of NetCompetition® a pro-competition e-forum supported by broadband interests and President of Precursor LLC, a research consultancy for Fortune 500 companies.