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"Call it the miracle on Francis Street. Last year Ryan and Jenny Carpenter got a deal seemingly too good to be true in their Kansas City, Mo., neighborhood: an installer from Google Fiber wired their bungalow to give them at least 50 times their previous Internet access speed and a substantially better TV service, all for only $125 a month, tax included\u2014just a few dollars more than they\u2019d been paying Time Warner Cable.\nRyan Carpenter still speaks in amazed tones of the December night when he simultaneously streamed four high-definition TV shows (two Christmas specials, an episode of The Office and a Kansas University basketball game), recording three of them on the included two-terabyte DVR. That\u2019s two more shows than he could previously watch at once, with plenty of capacity to spare. \n\u201CIt just blows my mind\u2014we can be running video via Wi-Fi on two smartphones and on two laptops and also be watching and recording TV shows all at the same time,\u201D he says. \u201CIt\u2019s a vastly superior service.\u201D And that\u2019s even without touching high-bandwidth web apps that work seamlessly at superfast speeds, such as 3D maps of cities that have imperceptible load times.\nThe question of how Google offered this value is a mystery to the couple\u2014and to much of the rest of the nation. It\u2019s not that the technology involved is groundbreaking; the fiber and connections are off-the-shelf technology. Yet Google\u2019s supercharged service is priced at just $70 per month, or $120 with bundled television, plus tax. \nFor the TV service, Google struck content deals, including for some sports channels\u2014though HBO is not yet part of the mix. And all of this comes with a Nexus 7 tablet remote and two terabytes of DVR storage plus another a terabyte of cloud storage. And a Google spokeswoman says the company \u201Cexpects to operate profitably\u201D and that Google Fiber is neither a loss leader nor a PR stunt.\nIf that\u2019s true, then why isn\u2019t it being made available everywhere? The answer is that there are no compelling business incentives for the established players, says Blair Levin, a former U.S. Federal Communications Commission chief of staff, who helped write the National Broadband Plan and is now executive director of Gig.U, a consortium of universities trying to deploy very fast networks in local neighborhoods.\nIn parts of the country, slower-speed copper, fast-download cable, and a few fiber networks are already built out. The cable distribution giants like Time Warner Cable and Comcast are already making a 97% margin on their \u201Calmost comically profitable\u201D Internet services, according to Craig Moffet, an analyst at the Wall Street firm Bernstein Research. As Levin points out, \u201CIf you are making that kind of margin, it\u2019s hard to improve it.\u201D And most Americans have no choice but to deal with their local cable company.\nWhile Verizon operates the fiber network serving the largest number of home subscribers in the nation, the company is backing off from installing additional U.S. fiber connectivity. The company\u2019s fiber service, called FiOS, offers basic service starting at 15 megabits per second (which can be upgraded in some areas to as much as 300 megabits per second). As of last year, FiOS had about 5 million subscribers (most of whom also take the optional bundled television service)\u2014or roughly one-third of the possible market where the company has strung fiber. But CFO Fran Shammo said in a conference call last fall that there are no plans to expand FiOS beyond those areas. \n\u201CAt this point we have to capitalize on what we have invested,\u201D he said. The basic goal is to sign up more people in the existing service areas, which adds the most revenue without increasing capital costs.\nThe story is similar with other carriers: Comcast\u2019s Xfinity Platinum offers 300 megabit-per-second download cable service in some locations (for about $300 a month), and Time Warner Cable is installing some fiber in New York City office buildings, but the companies are focused on capitalizing on existing cable infrastructure, not emulating Google Fiber by building out fiber connections to homes and businesses. \nIn Kansas City, Time Warner Cable in late January (likely in response to Google Fiber\u2019s presence) boosted speeds and lowered prices, offering download speeds of 100 megabits per second for $75 a month. For $199 users can get cable bundled with TV and phone service, with two DVRs.\nIn the United States, areas taking the one-gigabit plunge have benefited from some special circumstances. In Kansas City, Google has a good reason to experiment: its long-term corporate fortunes are closely tied to heavy web usage. At the end of the day, more web traffic\u2014and more eyeballs on that traffic\u2014means more ad revenue for Google.\nAll the same, Google is likely making a profit on fiber subscription sales alone, says Susan Crawford, a telecom policy expert who is a professor at the Benjamin N. Cardozo School of Law in New York and former special assistant for science, technology, and innovation policy in the Obama administration. \u201CThey are making money on sign-ups, and not counting on indirect effects,\u201D she says.\nGoogle wouldn\u2019t grant an interview about Google Fiber\u2014or even give the number of installations (though neighborhood sizes suggest it can\u2019t be more than a few thousand). But during an earnings call earlier this month, Google CFO Patrick Pichette said the company plans to finish building out the whole city, on both the Kansas and Missouri sides of the state line, and added that the effort \u201Cis not a hobby: we really think that we should be making good business with this opportunity, and we are going to continue to look at the possibility of expanding.\u201D\nOther special circumstances favoring one-gigabit construction can be found around universities, which themselves have skin in the fast-Internet-access game. Universities supporting the Gig.U initiative want to make sure they stay attractive to students and researchers who might want to access data and computing resources, and competitive with other institutions around the world that have such speeds. \nTheir efforts include a deal with a private company, Gigabit Squared, to deliver one-gigabit service in Seattle and Chicago in collaboration with local governments and universities. A similar effort is taking shape among several universities and communities in North Carolina.\nA final kind of special case is cities that are taking matters into their own hands. One example is Chattanooga, Tenn. There, the local power utility in 2010 managed to score $111 million in federal stimulus money to speed up the build-out of a one-gigabit network for a smart electric grid. It is now offering one-gigabit Internet access, albeit for about $300 a month, depending what TV service you get with it.\nBut overall, the United States languishes in the middle of the pack of the world\u2019s developed nations in Internet access speeds, with average download speeds of just 11.6 megabits per second. In many Asian and European countries, customers can commonly get affordable service providing hundreds of megabits or more.\nSo what would it take to get Google Fiber\u2013like service everywhere else in the United States? Not everyone has the ambition and the deep pockets to wage long-term, labor-intensive, block-by-block warfare with existing, well-heeled telecom companies. \u201COther startups trying to disrupt the Comcasts, Verizons, and Time Warners of the world will need similar access to capital\u201D as can be found in Google\u2019s deep pockets, Crawford says.\nCrawford says broader access to low-interest financing would help, as would federal legislation to supersede state laws that make it hard for local governments to build networks. For example, in 2011, after the city of Wilson, North Carolina, built its own fast network\u2014competing with existing carriers\u2014the North Carolina legislature, amid industry lobbying, passed a law that made it harder for local governments to build networks and prevented Wilson from expanding its network beyond a county line, she said.\nBut even if costs and legal barriers are lowered, fiber economics won\u2019t work for private companies everywhere\u2014not even for Google. After all, as Levin points out, 80% of the cost of running fiber is in the labor, not the fiber and equipment, and not all houses are as closely spaced as the tidy bungalows on Francis Street, where the Carpenters live. \n\u201CThere are a lot of cities where the math wouldn\u2019t work\u2014areas not densely built enough or where construction costs are too high. In California, the environmental permitting provisions make it cost-prohibitive,\u201D Levin added.\nThe FCC says it wants to help. Last month, at a U.S. Conference of Mayors meeting, FCC Chairman Julius Genachowski called for broadband providers and state and city officials to build out at least one \u201Cgigabit community\u201D in all 50 states by 2015. And the FCC plans to hold workshops in which broadband providers and state and municipal leaders can find and remove barriers, lower costs, and boost incentives for getting it done. Requests to the FCC for interviews went unanswered last week.\nAt any such meetings, it\u2019s likely that Google\u2019s strategy and example will be a central topic. To help keep labor costs as low as possible, Google secured guarantees from the Kansas City government that it would get rapid responses on mundane but important matters like city inspections, access to rights-of-way, and even free rein to run fiber in sewers. Kansas City says it will provide the same breaks to other companies willing to provide similar service. Google also adopted a novel preregistration scheme, which had it start stringing fiber in a given neighborhood only after a certain percentage of residents \u2014 5 to 25% \u2014 committed to the service.\nIt\u2019s a good start, but the United States has a long road ahead to achieve widespread one-gigabit service. Not every town has a university. Not every mayor can get his or her hands on low-interest financing. The FCC\u2019s efforts may fall short, and it\u2019s possible that Congress and the FCC won\u2019t make it easier for upstarts to compete with major carriers.\nThat might well leave Google or other aggressive companies to do the job. Crawford and Levin say they expect Google to expand to other cities. If that happens, then Google, with its long-term sights on web advertising dollars, might wind up giving an entirely new meaning to the term \u201Csponsored link.\u201D\nImage courtesy of Flickr, Robert Scoble"^^<http://www.w3.org/2001/XMLSchema#string>
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