What if rather than once a year, Austin were the year-round capitol of not only live music, but of startup culture and tech innovation? Not just a destination for discovery, but a home for it?
We could do it. That is, if we had the bandwidth.
A few weeks ago, Time Warner Cable’s CFO Irene Esteves stated publicly that there’s no consumer demand for gigabit broadband speeds.
“We’re in the business of delivering what consumers want, and to stay a little ahead of what we think they will want,” she said when asked about the breakneck internet speeds delivered by Google’s young Kansas City network. “We just don’t see the need of delivering that to consumers.”
Source: The Verge
Now, Ms. Esteves is a Chief Financial Officer. She knows as well as I do that the numbers behind Time Warner’s stance are not measured in bits. And in a town like Austin, fiber has more importance than speeding up YouTube videos.
That’s why all of us Austin-based nerds are so excited by today’s news: Google and the City of Austin will be making a joint announcement on Tuesday. And while the content of said announcement is secret, it could be the first expansion of the Google Fiber service outside of Kansas City.
Help us, Google – you’re our only hope.
Dollars and Sense
Google Fiber costs $120/month for bi-directional gigabit internet plus TV service. I pay about that for 30Mbps down and 5Mbps up, plus TV service, from Time Warner. I don’t even know what I’d have to pay Time Warner to get gigabit from them – their online price listings max out at $385/month for business-class 50Mbps up/5 down in my area (Austin). Compared to Google, that’s three times the price for 5% of the speed.
Seems totally competitive.
The reason consumers aren’t loudly clamoring for Time Warner gigabit is simple: they don’t want to pay more. Google’s not disruptive because they’re offering gigabit; they’re disruptive because they’re doing it at a price that consumers can actually afford. Arguing about speeds while ignoring cost is like citing Ferrari sales numbers to argue that no one wants a Ferrari.
Behind the Scenes
There’s also a cost factor at work on the ISP side. Time Warner has years’ worth of infrastructure built out, most of which isn’t designed to give end users anywhere near gigabit speeds. That’s a lot of capital investment. Couple that with almost nonexistent last-mile fiber (the cable that actually comes to your particular house) and you’re looking at a massive upgrade, if not total replacement, all while keeping existing service online. For an idea of how massive: Verizon recently spent $23 billion to serve 17 million homes with fiber.
Google, on the other hand, has all the advantages. No existing backend means they can build exactly what they need rather than trying to upgrade or repurpose something. Couple that with the ability to keep everything from set-top boxes to network servers in-house, and they’re able to deploy fiber to the home with an economy and efficiency that other ISP’s just can’t match. And while the argument can be made that the ISP’s have put themselves in this position through their reluctance to invest in ongoing innovation, the bottom line is that delivering a viable competitor to Google will be incredibly expensive.
Given all that, it’s much easier – and cheaper – to simply claim that people don’t want or need gigabit service.
A Case for Demand
I live in Austin, Texas. Our city – home to Dell, AMD, ARM, and many other tech companies – is seeing constant and dramatic population growth. We’re adding tech jobs by the thousands, and it’s not going to stop anytime soon. We’ve also got one of the country’s highest concentrations of downtown jobs, highways that haven’t kept pace with population growth, and a public transit system that’s a fraction of what it should be.
Know what could help with a lot of these problems? You guessed it: fiber.
The greatest potential of ubiquitous high-speed internet is its ability to decentralize almost everything we do. We already know there’s massive demand for decentralizing the workplace; just look at the backlash over Yahoo’s “no working from home” policy. From 2005-2011, the number of Americans working from home increased 73%.
This all happened using standard consumer technology. Imagine if suddenly every home had the connectivity of a large business. Actually, don’t imagine: look at Kansas City. Every livingroom becomes a potential startup, every neighborhood an incubator. Disruption breeds innovation, and with it follows commerce.
It’s also a boon for larger businesses. Why does a company that sells tractors need an IT department? It’s out of necessity – someone has to maintain the networks and servers within the company’s buildings that enable the office workers to do their work. But what if there were no networks and servers to maintain? The world becomes one big business LAN, with local servers replaced by cloud instances and ethernet closets replaced by ISP’s.
With that shift, a lot of services suddenly become a lot more attractive for a lot more purposes. Currently, it’s just not feasible to do most video production work in the cloud; the files are just too big for current broadband to transfer with any sort of speed. But if external connection speeds reached parity with my internal LAN, my infrastructure options increase dramatically.
Another widely overlooked advantage is utility efficiency. Wouldn’t it be wonderful if Austin Energy could utilize fiber to expand smart grid features? What if every home (not just my Nestopia) could dynamically adapt its power consumption to changes in weather, or even in the grid itself? That would definitely go a long way towards easing resource demands in a drought-prone Texas town.
Maybe if Austin looked more like that, all these SXSW visiting visionaries would never leave.