Regulatory Concessions Paved the Way for Google Fiber
Why did Google choose Kansas City to build its experimental fiber network? According to Forbes contributor Elise Ackerman, “…the key thing was that city officials promised to get out of the media giant’s way.”
Municipalities across the U.S., nearly 1,100 of them, competed vigorously to be chosen as the site for the project, but too few had a regulatory environment conducive to the investment that was required.
"Regulation can get in the way of innovation," said Kevin Lo, who oversees the Google Fiber project. "Regulations tied to physical infrastructure sometimes defer the investment altogether," he said in a speech at Broadband World Forum.
Milo Medin, Google’s vice president of access services, gave testimony before Congress last year where he explained how regulations can complicate and increase the expense of infrastructure deployment.
“Let’s start with rights-of-way,” he said. “Governments across the country control access to the rights-of-way that private companies need in order to lay fiber. And government regulation of these rights-of-way often results in unreasonable fees, anti-investment terms and conditions, and long and unpredictable build-out timeframes. The expense and complexity of obtaining access to public rights-of-way in many jurisdictions increase the cost and slow the pace of broadband network investment and deployment.”
Medin also described the negative impacts of outdated pole attachment regulations. Though hanging fiber from utility poles should be easier and less expensive than tearing up a street, regulatory compliance often increases the costs so much that any savings evaporates.
Even after the fiber network’s deployment was underway, regulatory burdens spurred Google to scale back the range of services it planned to offer over its new network. The company considered offering phone services but decided against doing so once the regulatory requirements became clear.
“We looked at doing that. The cost of actually delivering telephone services is almost nothing,” Medin said. “However, in the United States, there are all of these special rules that apply.”
NetCompetition.org Chairman Scott Cleland sees Google’s experience as a lesson to be learned. Those states that want super-fast, 21st century networks will have to reform their regulations to reflect that desire.
“This should be a wake-up call to the FCC and all the states that have not modernized their state telecommunications and regulations: their obsolete rules are a huge barrier to modernizing infrastructure and services for their citizenry. Simply, obsolete communications regulation is a dead end without a future; an unnecessary drag on investment; and a nonsensical cost sinkhole for any business that must comply with them.”
Susan Crawford, forever the pessimist when discussing American broadband, says Google Fiber “should make other mayors of cities very jealous and really make people unhappy about the status quo of wired Internet access in their cities. What this does is, for the first time, it allows people to question the status quo.”
If there are some questioning the “status quo” (though there can’t be many, since surveys show that 93 percent of Americans are happy with their broadband service), then the tale of Google Fiber is clear evidence that with the right policy and incentives, the private sector is ready to spend billions to upgrade and rebuild America’s communications infrastructure.
As Google learned in Kansas City, deploying a fiber network is an enormous undertaking, even with subsidies and unprecedented regulatory forbearance – two big advantages most broadband providers do not have. Policymakers everywhere can learn a lesson from their peers in Kansas City in that they should do whatever they can to welcome and incent private investment by removing legacy regulatory burdens.