Google Fiber provides faster Internet and, cities hope, business growth
By Cecilia Kang,
KANSAS CITY, Kan. — Smack in the middle of the nation, this city is about as far as possible from the hubs of high-tech innovation on both coasts.
An effort last spring to excite new Web entrepreneurs in a place better known for cattle drives and barbecue sauce turned up just a dozen people.
The company, dominant in the virtual world, began digging actual holes in the ground and connected homes and businesses to Internet speeds 100 times faster than most Americans have ever seen.
Three months into Google’s much-publicized experiment, signs of new business life have emerged. Nick Budidharma, an 18-year-old game developer, drove with his parents from Hilton Head, S.C., to live in a “hacker home” that’s connected to Google’s Fiber broadband network. Synthia Payne uprooted from Denver and landed here to launch a start-up that aims to let musicians jam real-time online. That sleepy weekly gathering for Web entrepreneurs recently attracted a standing-room-only crowd of 260 businesspeople, investors and city officials.
Just as the move from dial-up modems to higher-speed Internet connections helped launch Netflix, Facebook and YouTube, policymakers and Google hope this next leap forward will breed a whole new slate of innovations.
The effort also is turning up the heat on cable companies, which now have to compete for consumers who can get faster speeds at lower monthly costs. Those telecom companies have begun bidding against Google to wire firms and city buildings with equally high-octane Internet.
“What Google is providing is a catalyst. This infrastructure is enormously important to create a ripple effect of entrepreneurial activity,” said Lesa Mitchell, a vice president at the Kauffman Foundation, a multibillion-dollar nonprofit that is trying to help local start-ups and officials turn around this city.
It’s an audacious and unproven experiment, the equivalent of replacing country roads with the Autobahn speedway and then assuming Formula One race cars will materialize. The question is whether it is a curiosity — a publicity stunt — or an example of what could happen around the country if more cities had access to such fast connections.
Some privacy advocates also worry that the project raises questions about how deeply Google will become entwined in its customers’ lives.
“It gives them yet another way to gather and amass information about people, to build their digital dossiers,” said John Simpson, director at the public interest group Consumer Watchdog. “They have so much data about users at their fingertips and become a magnet for government request for that information.”
But local officials think those lightning-fast Internet speeds, which allow movies to download in seconds and create picture- and sound-perfect video conference calls, will enable companies to operate more efficiently and use increased computing power to create cutting-edge technologies.
The ripples so far are small. About a dozen start-ups have launched in the first neighborhood to get Google’s 1-gigabit-per-second service. Leading economic indicators such as employment growth haven’t budged. There is a frothy excitement, but even city officials who dub the region Silicon Prairie admit it will be hard to measure how the new network will lead to economic progress other than a general sense of activity.
“This is exactly what we hoped would happen. More home-sprung businesses. More competition. In that way, Google’s project is a success already,” said Richard Usher, the assistant city manager for Kansas City, Mo. The network was initially brought to neighborhoods on the Kansas side of the city and will be in its first community on the other side of the state line this spring.
Of course, Google has much to gain if the test in Kansas City works. It won’t say how much it spent to build the network, but it wants faster speeds so consumers will search more, put more videos on YouTube and shift all e-mails and documents to its cloud system of servers. By doing so, the company gathers more data to build more complete portraits of users and boost its $37 billion business of selling customized ads.
The company is taking small steps in other regions, and this month began to offer free WiFi to the Chelsea neighborhood of Manhattan. Its chief financial officer said in an earnings conference call this week that the firm thinks its foray into telecommunications is “not a hobby” and will be a real business.
For new entrepreneurs here, Google’s motives don’t matter. The faster and cheaper service opens up opportunities.
EyeVerify, a security software firm, was in a part of the city where AT&T was the only Internet service provider, offering maximum speeds of 5 megabits per second for $80 a month.
That turned the company’s daily tests of its software into a hair-pulling exercise in patience. The firm uses an individual’s unique eyeball vein patterns to secure smartphones and other devices.
But sending files with thousands of high-definition photos of eyeballs took hours to deliver and required constant babysitting of outboxes to make sure files went through.
On a recent afternoon, founder Toby Rush sat in the firm’s new office space in Google’s Hanover Heights “fiberhood” and sent several of those files within minutes.
He quickly uploaded large documents and videos on the cloud for his staff of 11 to access.
“This allows us to spend time on things that are much more useful and essential for the business to grow,” said Rush, one of hundreds of residents and entrepreneurs who have signed up for Google’s service so far.
Nearby on this former industrial strip in Hanover Heights, a dozen other start-ups have taken refuge in Craftsman-style homes. All connected to Google’s network, they call themselves Kansas City Startup Village.
There is a “Home for Hackers,” donated by a local resident who lets entrepreneurs live and work there for free.
Investors are showing greater interest, too. A microfinance investment firm called Justine Petersen opened an office in the city last year with hopes of investing more in the burgeoning tech community. The St. Louis-based company is looking at creating another Home for Hackers.
“We see much untapped potential here. Google is the spark,” said Galen Gondolfi, a spokesman for Justine Petersen.
Such opportunities have attracted start-up hopefuls such as Payne, who moved from her home in Denver last month to live in the first hacker home. Building her CyberJammer software requires massive amounts of bandwidth, she said.
In order for a drummer in Germany to play with a guitarist in Brazil, there can be no delay from slow Internet speeds. Here, Payne is betting the software she develops with her 1 gigabit connections will become the go-to place for musicians, though all will need similar Internet speeds for it to work.
She shares the bare-bones three-bedroom home with Budidharma, a recent high school graduate who is trying to create software for servers running multiplayer video games.
In his small bedroom with bunk beds covered in race car bedsheets and a desk with two monitors and a server, Nick pulls all-nighters coding and working with massive video files. Anywhere else, he said, getting the bandwidth needed for his firm LeetNode would be too expensive.
“It’s hard to develop a business when you have to think about the cost of Internet and speeds,” Budidharma said. “You don’t even have to consider it here.”
The hope is that these newcomers will drive the kind of economic growth the city seeks.
There is debate over whether access to the Internet betters an economy. Telecom operator Ericsson said in 2011 that doubling broadband speeds increases gross domestic product by 0.3 percent. The Federal Communications Commission has said areas that got broadband for the first time experienced a creation of 2.6 jobs for every one job lost.
On the Missouri side of the state line, businesses are eagerly awaiting the new service.
When T2 Studios sends its ultra high-definition videos, known as 4K video, to television stations in Chicago and Los Angeles, it has to degrade the quality for the files to transfer.
When Google’s network arrives in this part of the city this spring, T2 could send its pixel-packed videos in original form to clients.
The start-up buzz was on display recently at the Kauffman Foundation’s weekly meeting of start-ups, called “1 Million Cups.” Investors, city officials and budding entrepreneurs lined up against the walls to hear pitches by two start-ups.
City officials speculated that the Google project motivated Time Warner Cable to bid for a contract to wire a new city-sponsored start-up incubator in the old Union Station of Kansas City, Mo., with 1 gigabit speeds.
“It was the first time I had heard from Time Warner in six years,” Usher said.
For residents here, Time Warner Cable provides speeds one-tenth of Google’s for about $5 more than Google’s $70 a month.
In an e-mailed statement, Time Warner Cable said, “Kansas City has always been a very competitive market. We are confident in our ability to compete.”
That may be Google’s greatest early achievement. Its project — even if it never broadens beyond Kansas City — has drawn fresh attention to the problem of higher cable bills, poor customer service and low speeds in many parts of the nation, local officials say.
“This should make other mayors of cities very jealous and really make people unhappy about the status quo of wired Internet access in their cities,” said Susan Crawford, a former technology advisor to President Obama and author of “Captive Audience,” a new book on cable and phone monopolies.
“What this does is, for the first time, it allows people to question the status quo,” she said.
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