Google Got Sweetheart Deal in Kansas City to Build Its Competitor to Cable and Telco. Now Time Warner Cable and AT&T Want Same Sweeteners. Also, Google Plans to Bring the Service to More Cities

Oct 2, 2012  •  Post A Comment

Time Warner Cable and AT&T want the same concesssions that Kansas City — both Kansas City, Kansas, and Kansas City, Missouri — gave Google to build its network in those cities, The Wall Street Journal reports. [Warning: The WSJ is behind a firewall and might charge you to read this story.]

The article notes, "Among the sweeteners granted Google by both cities are free office space and free power for Google’s equipment, according to the agreement on file with the cities. The company also gets the use of all the cities’ ‘assets and infrastructure’ — including fiber, buildings, land and computer tools, for no charge."

The story continues, "For the past few months Time Warner Cable has been negotiating with Kansas City, Kan., to get a ‘parity agreement’ granting it the same concessions as Google got, the city and the company say. Time Warner Cable has already signed such a deal with Kansas City, Mo.
AT&T also has approached Kansas City, Mo., for the same deal, according to a person familiar with the matter."

The article adds, "Google is building a fiber network in the Kansas City area that will offer pay-TV and Internet at extremely fast speeds of one gigabit per second — a speed that the company boasts would allow a person to download a season of ’30 Rock’ in 30 seconds. The Internet company chose Kansas City from more than 1,100 cities in the U.S. that had expressed interest in having the Google Fiber network built in their areas. Google plans to start providing service in the first neighborhood, Hanover Heights, later this month."

The story also says, "Already, the situation has given the cities new bargaining power. The Kansas cities are asking Time Warner Cable and AT&T to promise new, improved community services comparable to the ones Google has offered — which include hundreds of free connections to government-picked locations — before they’ll give them a deal like Google’s."

Also included in the perks to Google, the report says, is the "unusual right to start its fiber project only in neighborhoods guaranteeing high demand for the service through pre-registrations. Most cable and phone companies were required by franchise agreements with regional governments to build out most of the markets they entered, regardless of demand.

"The concessions made by the Kansas cities raise an unnerving question for existing pay-TV and Internet providers: whether other cities across the country could offer similarly sweet deals that could encourage Google to expand its Fiber build-out. Jenna Wandres, a Google Fiber spokeswoman, affirmed Monday that ‘right now we’re focused on Kansas City, but we hope to expand to other communities in the future.’ "

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