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Comment by Inconel | Hacker News Reader

I won't be surprised if this news is met with the usual sentiment that Google abandons everything that isn't immediately hugely successful, and while I often share that criticism of Google, I can't really fault them too much in this case. Getting a nationwide ISP up and running from scratch just seems like an almost impossible task. This is disappointing to me nonetheless.

Can someone with knowledge of the industry explain to me what the biggest hurdles were for Fiber and what if any mistakes Google made in it's rollout? Am I correct in assuming telco interference or hostility played a part? What could Google have done differently for Fiber to be profitable, or is this simply not an industry that you can hope to be profitable in unless you look 20-30 years out?

Basically I'm curious to learn whether this is a result of mistakes on Google's part, Google just not having the long term wherewithal for the rollout, or market/regulatory forces making such a project impossible at this time?

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I worked briefly on the Fiber team when it was very young (basically from 2 weeks before to 2 weeks after launch - I was on loan from Search specifically so that they could hit their launch goals). The bottleneck when I was there were local government regulations, and in fact Kansas City was chosen because it had a unified city/county/utility regulatory authority that was very favorable to Google. To lay fiber to the home, you either need right-of-ways on the utility poles (which are owned by Google's competitors) or you need permission to dig up streets (which requires a mess of permitting from the city government). In either case, the cable & phone companies were in very tight with local regulators, and so you had hostile gatekeepers whose approval you absolutely needed.

The technology was awesome (1G Internet and HDTV!), the software all worked great, and the economics of hiring contractors to lay the fiber itself actually worked out. The big problem was regulatory capture.

With Uber & AirBnB's success in hindsight, I'd say that the way to crack the ISP business is to provide your customers with the tools to break the law en masse. For example, you could imagine an ISP startup that basically says "Here's a box, a wire, and a map of other customers' locations. Plug into their jack, and if you can convince others to plug into yours, we'll give you a discount on your monthly bill based on how many you sign up." But Google in general is not willing to break laws - they'll go right up to the boundary of what the law allows, but if a regulatory agency says "No, you can't do that", they won't do it rather than fight the agency.

Indeed, Fiber is being phased out in favor of Google's acquisition of WebPass, which does basically exactly that but with wireless instead of fiber. WebPass only requires the building owner's consent, and leaves the city out of it.

It's very interesting that you say the biggest hurdle was regulatory capture, that is certainly depressing.

This leads me to another question that maybe you or someone else can answer, although I understand if you can't for various reasons. There seems to be a ton of very smart people working at Google and I can't imagine that they would go about trying to set up their own ISP without taking into account the huge pushback they would get from existing telcos, so I would imagine they had plans to deal with all of this. Did Google underestimate the amount of pushback they would receive, did they feel they could effectively lobby for changes which turned out to be unsuccessful? Or has something else changed in the proceeding years since Fiber originally rolled out that makes Google think it is no longer worth the fight?

I'm not sure, exactly - most of the discussions about whether Fiber would be viable happened long before I was on the team, and in any case I wasn't privy to them. Here is Milo Medin's (Google Fiber's "founder") testimony before the House Oversight Committee on regulatory issues in ISPs:

https://oversight.house.gov/wp-content/uploads/2012/01/Testi...

(From Apr 2011, over a year before Google Fiber actually launched.)

Calling the disputes over utility poles in KC "regulatory capture" is quite a bit of historical revisionism. This ArsTechnica article does a good job of explaining what the dispute was about: http://arstechnica.com/tech-policy/2013/12/why-att-says-it-c....

Also, Google got very preferential treatment when it came to pole access in Kansas City: http://www.wsj.com/articles/SB100008723963904438626045780306... ("The cities are discounting other services, as well. For the right to attach its cables to city utility poles, Google is paying Kansas City, Kan., only $10 per pole per year—compared with the $18.95 Time Warner Cable pays. Both cities have also waived permit and inspection fees for Google.")

My bias in this thread is pretty obvious, but to me, that ArsTechnica article doesn't make AT&T look any better. Their response was basically "Here, you want to be a telecom? Go clear all these regulatory hurdles that we've already done", without at all addressing whether those regulations are worth having in the first place. That's almost the definition of regulatory capture: when regulations exist to create barriers to competitors rather than to protect the public interest.

I think it's actually the opposite of "regulatory capture." It's not about the incumbent getting special treatment, but making sure a new entrant doesn't get special treatment.

If the regulations only serve to protect incumbents by raising the barriers to entry, ignoring whether this is the case here, rather than the public interest, isn't it still valid to argue that this is regulatory capture? I'm genuinely curious here and not trying to be obnoxiously argumentative.

Yes, that's a literal textbook example of regulatory capture.

There are many other examples of rent-seeking. One of the most common ways of using government to eliminate competition is what is referred to as "regulatory capture." This is the case where regulators end up acting in ways that benefit the industries that they regulate. Many government agencies are generally created with the high-minded notion of protecting the public from rapacious behavior of corporations. However, these corporations can use the government agencies to protect themselves from competition, most frequently by encouraging a set of regulations that makes it very difficult for newcomers to enter an industry. They use the creation of regulations as a barrier to entry.

https://www.e-education.psu.edu/ebf200wd/node/160

Before claiming "regulatory capture" don't you have to make some facial showing that the regulations only exist to protect incumbents? The regulations at issue are Title II, which everyone here loves.

> It's very interesting that you say the biggest hurdle was regulatory capture, that is certainly depressing.

Why is that depressing? Do you feel any company should be allowed to build a phone line above your street, instead of being a regulated monopoly?

This is what happens when you do that:

http://io9.gizmodo.com/photos-from-the-days-when-thousands-o...

A lot of those pictures seem to be due to limitations in the technology they were using, not limitations of regulation... however, to address your question- if society decided to grant someone a monopoly, it should be to the government, not a private entity. So, for example, if society decided we only wanted one set of fiber cables ran throughout the city, they would decide that the city would run them, and then lease access (using VLANS or similar tech) to any service provider that wants to use them.

You know, returning home to the USA a couple times a year, I am really struck by how many freaking power and phone lines are everywhere. It seems like every single street, except for the very core of cities downtown, and only the very wealthiest neighbors, have buried lines. In Germany, almost every town and every highway is free of these (IMO) ugly poles with lines everywhere. It's really an eyesore when you finally glance up.

Germany is also a significantly smaller area with more of the population in high density zones compared to most of the USA.

Aboveground cables are easier to repair and much less expensive to string up over thousands of miles.

I hear this argument a lot and it doesn't really hold water. Essentially every little town, village, city, even along highways, everywhere in Germany, the cables are buried. Even in low density towns. Even to farms out in the country. Pretty much the only things that aren't buried are high-tension lines.

Lines exposed to the elements wear faster than buried lines and are subject to more outages due to weather and accidents.

It's just that in the USA towns and cities are either too disorganized or too cheap to invest properly in infrastructure. Burying lines seems like such a small thing until you realize how ugly lines strung everywhere are. It makes me feel like I am coming home to a third world country sometimes.

My mother-in-law has a cabin in northern Minnesota. It's three miles outside a town of 150 people. Her utility lines are buried. Meanwhile, I live four miles from the center of a metro area of three million and everything in my neighborhood is above ground.

I suspect the major difference is that the power and phone companies in the little town are customer-owned coops while the utilities in my metro area are huge conglomerates.

> "Here's a box, a wire, and a map of other customers' locations. Plug into their jack, and if you can convince others to plug into yours, we'll give you a discount on your monthly bill based on how many you sign up."

How would that break any laws? It's essentially doing a commercial mesh-net of sorts, like many are already doing in Europe and elsewhere.

If instead, they gave you a box and a map - and that box supported wifi - then a mesh network or something would be feasible. Wired could be done by running the wires along the fence or trenching inside the property line (neighbor to neighbor - if your neighbor is willing).

Otherwise, point-to-point mesh wifi (or maybe even free-space optical - like the Ronja system).

Not sure where any of that would be illegal as long as no other carrier's TOS was infringed or such...

The box wouldn't be WiFi. That doesn't have enough bandwidth for the target results. It would be a wire or optical fiber, and it probably won't be a continuous stream of direct neighbors: people would run it across the street through storm sewers, string it up on utility poles, bury it an inch deep across the local park or unknowing intermediate neighbors, or even renting a trencher or pipe layer and installing it like a utility would... However they can get it. The data finds a way. Legally, those require permits.

And that's _exactly_ why Google didn't go that route! I'm all in favor of sticking it to Comcast/Time Warner/whomever, but I very much do _not_ want my neighbors taking it upon themselves to try and run homebrew fiber through the city park by my house, or under my backyard without my knowledge or permission. If I owned utility poles, I would presumably have some opinions about people climbing up to install their own cables, and if I didn't, I'm sure that whoever I buy liability insurance from would!

Look, there are reasons why cities have permitting processes. Those reasons sometimes do include regulatory capture, etc., but generally they have to do with making it possible for large numbers of people to make productive and stable use of shared resources and infrastructure in an organized manner. I'll be the first one to agree that some permitting processes in some areas are imperfect, but that's not a reason to ignore them whole-hog.

> How would that break any laws? It's essentially doing a commercial mesh-net of sorts, like many are already doing in Europe and elsewhere.

I believe—depending on the municipality—if you knowingly and explicitly share internet with others you open yourself up to the sorts of regulation ISPs have to deal with.

For some reason that was the most depressing thing I've ever read about the future of the internet.

Wouldn't surprise me if there are some local regulations about how wires or cabling can be run and who can do the installation, but I'm not aware of any specific laws.

I don't understand a few things about Google fiber ever as a long term viable business unit inside Alphabet as a whole. As you mentioned in the thread, and I agree with the sentiment, Access succeeds by forcing others to take action. For example, bidding on wireless spectrum for get open access.

But does Google really want to be the one left holding the hot potato in situation like this? Does Google have any success/relevant experience in running a business like a residential ISP? Even established telcos like Verizon can't grow wireline very much.

You mention AirBnB and Uber as successes but those legal battles aren't over yet, with examples such as Austin/Uber and NY/AirBnB just recently. Also I think the value provided by Uber/AirBnB is much larger then Google fiber, which is to serve like 6 US cities with marginally faster internet that most websites can't even take advantage of.

Also I find your statement "they'll go right up to the boundary of what the law allows" as disingenuously painting Google as helpless & innocent. Google has gone to court for a variety of things they felt were worth it for their business 1) Anti-poaching 2) Google books scanning 3) Youtube copyright 4) Oracle Java

Whether or not you believe they were in the right or the wrong, they are a massive multinational corporation who are capable of arguing for their business interests in court. Whether Fiber was ever important enough for Google as a long term real business unit is what I question. They put 4.5 billion on the line for spectrum open access, I don't see the same time of commitment applied to Fiber at all.

Basically what I'm asking what was the successful longterm outcome for fiber if not a quiet drawdown like this? For Google to really be a large US ISP?

My totally non-professional opinion is this: the problems of there not being good ISPs in the USA isn't a technical or infrastructure problem, where Google excels. They are instead political and organizational problems. Existing ISPs give as little as they can legally get away with while extracting as much money as possible from customers, by hook or by crook. If Google enters a market to provide a better service, Comcast et al. can easily pretty much flip a switch in that market to start providing a better service to hold onto their disgruntled customers, depriving Google of much of the market it needed to make Fiber profitable.

So Google ends up spending a bunch of money while not being able to capitalize on it.

> If Google enters a market to provide a better service, Comcast et al. can easily pretty much flip a switch in that market to start providing a better service to hold onto their disgruntled customers, depriving Google of much of the market it needed to make Fiber profitable.

This is why the pure libertarian ideas about a completely free market just don't work for some services. It is a complete waste of human and material capital to run more than two last-mile networks (the second for redundancy and you could argue that is also a waste). When you've got more than 4-5 you simply can't ever make a return on investment.

The physical last mile should be separated from the rest of the business and managed by a public benefit or non-profit. It works just fine for electricity choice in states like Texas. We already know the physical fiber can carry 100GB, probably a lot more. The infrastructure would be suitable for at least the next 100 years.

Leave ONT and central office equipment up to individual vendors who want to offer service, which gives them the maximum ability to compete on provisioning, backhaul, customer service, and features.

If you want to object that it is government regulation ruining the free market... well I have news for you: a completely free market has never existed. Ever. In the history of the world. People use social connections, money, and power to stifle competitors. They've been finding creative ways to do that for thousands of years. To pretend that a limited and weak government will be able to exert any control over huge multinational corporations is laughable. Even Uber and AirBnB had to use social pressure to force through changes.

To me, the ideal setup is a single entity, whether govt, coop, or nonprofit, to run the 'last mile' to the homes as a utility (gpon or something similar). then let ISP's, telcos, etc run their fiber to the CO, and provide internet, TV, and voice. A bill gets split up, and the utility gets a small percentage for maintenance, repairs, on-site troubleshooting, and upgrades. ISP's no longer need a fleet of techs, and just need to worry about core infrastructure. Competition thrives, as you note just need to connect to a CO to start competing, etc. Actually very similar to how many rural power co-op's with now. Since the utility is small and local, you can actually talk to them about concerns, etc.

>This is why the pure libertarian ideas about a completely free market just don't work for some services. It is a complete waste of human and material capital to run more than two last-mile networks (the second for redundancy and you could argue that is also a waste). When you've got more than 4-5 you simply can't ever make a return on investment.

If the current environment is preventing any and all business from flourishing, in this specific case Google Fiber, this is arguably even more wasteful. There is nothing getting done instead of something getting done. The political & regulatory maneuvering probably costs nearly as much for Google Fiber would as building out more redundant infrastructure. Plus, their business model may have required a large amount of users to really make the business worthwhile, so they wind up in this situation where they can't expand fast enough.

Google Fiber was never in my city, but can those with Google Fiber in their area weigh in on the above? When Fiber came to town, what happened with the existing ISPs in the area? If you called to cancel and explained moving to Fiber, did they give you an offer you couldn't refuse to stay with their services, and if so, did you take it?

Here in Provo, Comcast was astonishingly effective at preserving market share. As soon as Google Fiber was announced (and long before the first hookups took place), Comcast started dropping all kinds of deals in our laps -- things like 250 Mbps download speeds for the price you were currently paying for 20 Mbps. But they were all contingent upon your signing a new 3-year service agreement.

Most people don't appreciate how long a Google Fiber roll-out takes. I waited nine months to be connected and I was lucky. My parents had to wait two years. Google offered very little visibility into when the install would take place. (We've been waiting two years now for a hookup at my small business, with no end in sight and no way to get an estimate from Google.)

These realities gave Comcast a giant head start to perform customer retention jujitsu. It basically took a steely determination (or an implacable hatred of Comcast) to resist the deals being offered in all the calls, letters, and emails. You could accept their deal -- and be enjoying 12x faster internet within a week -- or hold out for Google Fiber at some undetermined future point.

So many folks were taking the bait that Comcast brought a great many contractors in from out of state to handle the volume of upgrade service calls. For months, nearly every room at a Residence Inn near my home was occupied by out-of-town Comcast crews. Every space in the parking lot was filled with a Comcast van at night (hilariously, each van had its orange cone deployed in front as per company requirements).

When I finally was able to contact Comcast to cancel after our Google installation, the rep had a special script for Provo customers. It centered around questions of whether we were actually achieving gigabit speeds in real-world situations. Though I still proceeded to cancel their service, it was a pretty devastating critique as no one connecting over wifi (which was almost everyone) could even achieve the 250 Mbps speeds Comcast was offering, to say nothing of the gigabit speeds Google had sold you.

I'm happy with Google Fiber overall and I certainly don't miss Comcast, but they wound up being a more capable competitor than I'd ever have suspected possible.

http://thenextweb.com/insider/2016/08/22/comcast-hopes-you-d...

That doesn't prove anything, but their prices certainly are eerily competitive with Google's in any market that Google entered, while they're... terrible everywhere else.

This is standard competition. When VZW was laying fiber in various places, as soon as they turned it on where a friend of mine was living Comcast proactively lowered his bill.

Kansas City here. We recently moved to a new neighborhood where Google Fiber is still two streets away from us (our house was very recently finished and there are lots of vacant lots on our street still). We'd had Google Fiber before.

We signed up for Time Warner and the rep expressed surprise that we wanted them just for Internet, since Google Fiber is a thing, until we explained the situation. That should give you some idea of how it affected them.

Prices have dropped for other providers, and speeds have gone up, though they're still worse than Google Fiber. It's been great. I'm really bummed that this may mean they won't ever hook our street up, or at least that it'll be delayed until someone else takes over their infrastructure and starts expanding again.

That's exactly what happened in Austin. As soon as Google Fiber was announced Time Warner increased speeds by 5x for the same price and AT&T announced gigabit fiber for the same price as Google (and I think they are installing it much faster). They probably just increased prices in other cities to make up for lower profits from Austin.

The point of Google's Access businesses is that they win either way. If they go in and compete successfully, they get all the customers and make a profit. If they go in and Comcast et al raise their speeds to match, they've made the Internet faster and they profit off of increased search revenue and more YouTube playthroughs.

The only way they can lose is if they're forbidden from entering the market at all, which unfortunately is what happened with Fiber. They're still betting big on the space with Loon, Fi, and Webpass, though.

"Existing ISPs give as little as they can legally"

I would add legally and illegally. Also, 'get away with' means everything from strong arming, being sneaky, flat out lies, bribing, etc.

The biggest hurdle is simply the "physics" of building a fiber network. It's not just expensive to run fiber by every household. That expense is effectively multiplied by a factor of three because you can really only ever hope to get about 1/3 of the market. That's about what Fiber plateaued at, and what Verizon FiOS has plateaued at. So if it costs $1000 to run fiber past a house and $500 to connect a house, and you manage to get 1/3 of houses you pass to sign up, your net cost per house is 3 x $1,000 + $500 = $3,500.

The existing telecom companies definitely used legal tactics to discourage fiber rollout. But nobody manages to deploy telecom infrastructure without dealing with lots of lawsuits. AT&T might have complained about Google moving its fibers on AT&T polls, but at any given time it's facing lawsuits over stuff like fiber cabinet siting.

Even with those lawsuits, Google got a much better deal on the regulatory front than incumbent companies. Every Fiber city granted fast-track permitting, and declined to impose build-out requirements. That's huge. Ordinarily, cities force ISPs to build out to all neighborhoods without regard for probable subscribership. Google totally bypassed that with its "Fiberhood" model, where it built out to neighborhoods with demonstrated interest. Nobody else in the industry gets that kind of preferential treatment. Google got it because of the huge amount of goodwill Google has as a brand.

Reading your response as well as others' really illustrates to me how depressingly difficult this task is. I honestly have to give Google a lot of credit for Fiber, even if it ends up being a failure, in fact I now have a bit more respect even for the big telcos, its pretty amazing that such a convoluted system functions at all.

I tend to be somewhat skeptical of large government programs, although not fanatically so, and even to me this situation seems like it could be much better handled if all, or much of the infrastructure, at least in terms of things like utility poles, would be municipal owned and then leased out to service providers. I wouldn't necessarily want the government running the actual service but if they owned the physical infrastructure and leased it out I feel like we might actually have much more private competition.

Does anyone know how utility pole ownership by telcos or power companies came about in the US? It seems like some are municipal owned while others are entirely privately owned.

Also, when people talk about municipal fiber in the US are they mostly talking about municipalities owning both the infrastructure as well as being the ISP? Are there examples of private/public partnerships were the gov owns the infrastructure but the service is provided by private industry?

Regarding your last point about Google getting preferential treatment, I am not at all disputing this, but I believe even Google had to provide fiber to certain municipal or civic organizations. I could be misremembering that though.

Edit: Apologies if some of my questions are unduly broad in scope.

In most places, it's the power company that owns the poles because it's the power company that builds and maintains them. In a few places, the phone company does it. In theory, though, they are supposed to offer non-discriminatory access to the poles.

Re: preferential treatment, Google definitely didn't get away scott free. Building an ISP in any municipality means agreeing to a grab bag of concessions. Build out requirements tend to be the most expensive. Every house you pass that doesn't subscribe means you need to recover $500-1000 from a house that does subscribe. But any municipal cable franchise will be full of stuff like requirements to build fiber to government facilities and schools, payments to support public access TV, etc. Google did get a better deal, though. For example, in KC, it ultimately ended up paying half the pole rent Time Warner does.

Did Google Fiber use a municipal cable franchise agreement?

Also, doesn't the FCC have the power in certain states to regulate pole attachment rates?

So, where I live, on one side of the street, the electric company owns the poles, on the other side of the street, the phone company owns the poles. The franchise agreement does not have anything about payments to support public access TV, nor anything PEG related.

In a neighboring municipality, the municipality owns the the electric company and thus the poles.

I believe some of the original AT&T telegraph poles were placed by the Union army after the Civil War?

Only speaking with knowledge of their first market (Kansas City), I would guess it is a combination of three things:

* Buildout costs

Google was using the same contracts as everyone else for the fiber infrastructure install. The guys running the trenchers and directional drills where the same guys that do it for AT&T, Time Warner, Comcast, whomever. Google built at such a pace they certainly were not getting any deals, and very likely significantly increased the costs due to the massive amount of work that was being generated vs. available contractors. Capex cost is everything and they were just blindly writing checks to other people to get it done.

Google was innovative in their "fiberhood" signup process where they heavily marketed to their targeted expansion areas to encourage a certain take rate before build out. I suspect this saved them some money (or rather allowed their CapEx to be spread over more subs), but after that initial signup, I'm not sure there were any efforts to promote further subs. (Actually I'm not even sure people could subscribe after the initial buildout).

There was no Google magic about the fiber installs. It is stringing fiber along poles or burying conduit and running fiber through it. If there was some breakthrough that was able to be made here or technology which gave them an advantage on the CapEx required, it would have been huge boon. There wasn't.

* Access or cost of access to AT&T/KCPL utility poles

Unsurprisingly those that owned some of the utility poles here (AT&T and KCPL) were more than happy to smile while screwing Google's fiber effort. The rates and access rules for these things are set at the Federal level and lobbying by telcos/utilities is fierce. Google's blank regulatory check from the cities was worthless on this front (except for parts of KCK where the local government owned some poles). The cost and regulatory burden for utility pole access is drafted to simply make use impossible or uneconomic.

* A gradual mindset transition to a "Wireless is easier than all this ditch-digging" mindset.

Google has been doing a lot of work with licensed spectrum. Maybe they ran the numbers and figure it is cheaper to buy some spectrum and see if they can work some wireless magic (either technology or special FCC regulation perks) and make it their special sauce. I don't think I'm betting on that particular horse.

It seems that a lot big players are betting fixed wireless for the urban market(instead of the smaller rural market) . It's probably the main purpose of 5G. And there's some nice technical innovation(cohere promises to solve fading, tarana talks about working in urban non-line-of-sight) . And even LTE-A offers nice capacities in that context.

So why are you betting against it ?

By its very nature, it is inherently more unreliable than a "wired" connection.

Additionally, as usage of a particular endpoint increases, capacity for each individual user decreases proportionally.

There was an article some days ago about how we used to get these amazing LTE speeds, but now they are horribly congested and feel like low-grade DSL.

I believe there are already places with fixed wireless services(austria or south-korea if i recall correctly) that looks competitive.

Very interesting regarding CapEx and Google blindly writing checks. So it would appear that in addition to the regulatory hurdles Google also made some poor decisions in the rollout and signup process. Would Google have been better served targeting smaller cities that might have been more receptive to Fiber than the ones they ended up building in? Or is there not enough money to recoup costs in smaller cities?

Regarding utility pole access being handled at the Federal level, is there any lobbying campaign at the national level to rewrite the rules governing access to make the situation less skewed towards incumbent telcos? In my area here in LA county, it seems most utility poles are on public right-of-ways, I would think it would make a lot of sense to have those poles available for any company that wants to compete to offer services. Is there any meaningful reason this isn't done aside from cronyism on the part of the telcos?

I'm suspect of the CapEx arguments. The whole reason for the "fiber rally" procedure, and for offering free 5 MB/s Internet, was to get every house on the block to sign up. The marginal cost of a contractor going next door and wiring their house up is significantly less once they're already out there than if the contractor has to make a trip out to each home; it wouldn't surprise me if Google's CapEx costs were almost an order of magnitude less than Verizon or ComCast. (How much time does the cable guy actually spend installing cable, vs. driving to the place, making sure he got the right house, and context-switching between tasks?)

> In my area here in LA county, it seems most utility poles are on public right-of-ways, I would think it would make a lot of sense to have those poles available for any company that wants to compete to offer services.

That is the law! https://www.law.cornell.edu/uscode/text/47/224

> A utility shall provide a cable television system or any telecommunications carrier with nondiscriminatory access to any pole, duct, conduit, or right-of-way owned or controlled by it.

There was some dispute as to whether Google Fiber counted as a "telecommunications carrier" for purposes of Section 224, but that is probably mooted now that the FCC has determined broadband providers are all "telecommunications carriers" subject to Title II.

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