I’ve written about Google Fiber just once before, and that was to talk about my installation experience when I briefly lived in one of the very few areas where the service is available, in Provo, Utah. However, today I wanted to unpack something different about Google Fiber, in part in response to some recent articles I’ve seen, such as this one. These pieces often cite competition from Google as the major factor in a perceived shift in the status of broadband in the US, and that isn’t quite what’s happening. I would argue that Google has had a significant impact on the rollout of broadband in the US, but mostly not because of direct competition.

Maps tell part of the story

As I mentioned in that opening paragraph, Google Fiber is actually available in very few places today. Here’s the map from Google’s Expansion Plans page:

The company being most aggressive currently with rolling out gigabit services is AT&T, and here’s its equivalent map:

Note, first of all, that both companies have the same three categories – cities where they offer service today, cities where they will definitely launch in future, and cities which are in an exploratory stage. That’s something that we’ll come back to later.

But the second thing to note is that, of the 27 metro areas listed in total on the two maps, just seven appear on both maps, with the other 20 being mutually exclusive. Yes, you can absolutely make the argument that AT&T is responding to competition from Google in some of these markets, notably Austin (the same goes for some of the incumbent cable operators). But in a majority of cases, AT&T is launching or contemplating a launch in cities where Google isn’t present. So, though Google helps to explain why AT&T is launching gigabit service in some markets, it’s clearly not the whole answer.

Google’s real innovation: turning the model on its head

In what sense, then, is Google having a significant impact on the market? Well, the answer is that the key innovation Google brought to the broadband market has nothing to with technology and everything to do with business models. Essentially, it turned the traditional model on its head. If you’re not familiar with how broadband and TV operators usually roll out service, here’s how it’s traditionally worked. The provider approaches the municipality where it wants to offer service, and requests permission to do so. The municipality then extracts every possible concession from the potential provider before finally (if the provider accedes to the terms) granting permission. These concessions have typically included minimum coverage requirements, free access for schools, libraries and the like, carriage of local content on TV services, and so on. Essentially, providers have traditionally had to bribe municipalities with a variety of goodies just to get permission to offer service, and then have often still had to work very hard to get access to infrastructure needed to roll out the service.

Enter Google. Google’s process, of course, was entirely different: it essentially announced a competition for a city to become the first Google Fiber location, and invited cities effectively to bid for the privilege. What happened as a result was that over a thousand cities across the US applied, and Kansas City was eventually chosen. In the process, Google turned the usual model on its head – instead of municipalities extracting concessions from Google to roll out fiber, Google would extract concessions from cities for the privilege of having Google Fiber rolled out. Cities wouldn’t impose any “redlining ¹” restrictions, they’d smooth the path for Google to build the necessary infrastructure, and so on.

The first reaction of Verizon and AT&T, which had just spent painful years getting franchises in many individual municipalities for their fiber rollouts, was outrage. However, their second reaction was far more productive, which was to say that they, too, would be willing to roll out such services if cities would offer them the same terms and concessions, starting with Austin, Texas, where AT&T was one of the incumbent operators. Though this claim was met with some initial skepticism, AT&T has since followed through not just in Austin but in a number of other cities where Google isn’t present at all. AT&T, then, has benefited enormously from Google’s business model innovation, which allows for a demand-led rollout facilitated rather than held back by local municipalities. And it’s this innovation which has allowed AT&T to rapidly expand its GigaPower services to many other cities too, well beyond those where Google is competing with AT&T. (Verizon, of course, had largely completed its FiOS rollout by the time these changes happened, and so wasn’t able to take advantage of them in the same way).

Rollout details

As I close, I’ll return briefly to something I asked you to note earlier – the three categories of cities both Google and AT&T list on their maps: open markets, announced markets, and markets under consideration. This is a critical part of this whole model, and the innovation Google brought to the market, because the markets under consideration are those currently being invited by the two companies to make big enough concessions to make a rollout worthwhile. The same process that got Google Fiber into Kansas City is now being repeated across the country by AT&T and Google in very much the same way.

What’s very different between the two companies, though, is the way they treat those first two groups, and Austin is a great case study of this difference. Google announced the Austin market in 2013, and now has one neighborhood (or Fiberhood, to use Google’s terminology) up for sale. Four other neighborhoods are listed as under construction, while “Rest of Austin” (the vast majority of land area in the city) is described as “coming soon”. Contrast this with AT&T, which made a rushed announcement within a week of Google’s, but completed its 1 gigabit rollout by September 2014. AT&T’s big advantage, of course, is that it already has a network and lots of customers in Austin, and in almost all the other cities where it will launch GigaPower service. This obviously dramatically speeds up the rollout, and in almost all cases will mean that AT&T is way out ahead of Google even in cities where the two compete. (In Austin specifically, the fact that AT&T owns a lot of the infrastructure Google needs access to for its rollout has been another significant factor).

Closely connected to this is the size of the cities these two companies are targeting – though Google has tended to focus mostly on second-tier cities in its early rollout, AT&T is already in Chicago, Miami, Atlanta, Dallas, and Houston, and has other major cities like LA, San Francisco, and San Diego on its exploratory list. Again, when you already have a network, contemplating a rollout in a major metropolitan area is much more palatable than if you’re having to start from scratch. So, AT&T’s launched cities see far greater availability more quickly, but its announced cities are also likely actually see gigabit services widely deployed far faster than Google’s.

So, in the end, though Google spearheaded this move to gigabit broadband, it’s quickly ceding the market to others, and especially AT&T, which are piggybacking off its business model innovation and rolling out services much more quickly. In the end, though, perhaps that meets one of Google’s original goals very effectively, and perhaps better than Google’s own rollout could have done. After all, one of the major drivers behind Google’s rollout was improving broadband access across the US.