Current Issue
This Month's Print Issue

Follow Fast Company

We’ll come to you.

10 minute read

Elasticity

Lessons From Google’s First Rollout Of Google Fiber

In Kansas City startups are growing, cable companies are catching up, but the digital divide is as wide as ever.

Mike Demarais, 20, moved from Boston to a small Kansas City, Kansas home to become a resident of Kansas City's first 'fiberhood,' as Google is preparing to launch its gigabit high-speed Ethernet internet service. The house is owned by Ben Barreth, represented by a photo cutout, at left, who bought the house in the neighborhood to encourage tech business startup companies.

[Photo: David Eulitt, Kansas City Star, MCT, Getty Images]

Three summers ago, it was everywhere: An old-fashioned ice cream truck with peppy, electronic music blaring from its speakers. Covered with rainbow-hued rabbits, the truck wound through low-income neighborhoods of Kansas City, offering two premium products: KC favorite Shatto Ice Cream Sammiches, which usually go for $3.99 each, and Google Fiber, a product the city is newly famous for.

Kansas City had the first Google "fiberhoods" to go live, and those high-speed neighborhoods now sit in the middle of a city that, like many, is working to change itself from a blue-collar manufacturing depot to a digital business destination. If the cities just inducted into Fiber-dom—Google recently announced that Atlanta, Charlotte, Raleigh-Durham, and Nashville are next—want to know what’s in store, they should look to the west.

Because today in Kansas City, Google Fiber is a lot like a $4 ice cream sandwich on a hot day—a welcome treat for people with disposable income, but still out of reach for others.

KC was a new challenge for the Mountain View-based search giant. Before its fiber product, Google never had to initiate a traditional street marketing campaign. In July 2012, a team of 60 Google employees with clipboards worked 80-hour weeks in a six-week blitz, chatting with neighborhood associations, going to town hall meetings and church meetups to spread the promise of Internet speeds of up to 1 gigabit per second. In order for a neighborhood to have access to the service, 5% to 25% of its residents had to sign up in advance to qualify as a fiberhood. (That fluctuation in percentage is driven mostly by population density, but also includes other factors affecting the cost of building fiber networks. In dispersed, suburban areas, for example, more people need to sign up.)

In May, market analysts from Bernstein Research were surprised by what they found on their proprietary, door-to-door survey of about 350 households in the Google Fiber footprint. They found 75% penetration of Google Fiber in medium-to-high income neighborhoods and 30% in low-income neighborhoods. The Wall Street Journal published a similar survey in October that found only 15% of residents in six low-income neighborhoods surveyed subscribed to any version of Google’s service. The research also shows 9% of surveyed new subscribers previously had no Internet at home before.

What Google Fiber Can and Can’t Do

The divide between the haves and the have-nots runs deep in Kansas City: 70% of children on the Missouri side don’t have at-home Internet access, and 25% of Kansas City-area residents don’t have Internet access at all, according to local nonprofit Connecting for Good.

Those numbers are a lot higher than the nationwide average, where only 9% of adults don’t have at-home Internet access, and the 15% of adults across the U.S. who don’t use the Internet, according to a 2013 survey from the Pew Internet Research Project.

"What Google did for Kansas City and the digital divide, which already existed, was put a spotlight on it," says Kansas City, Mo., Mayor Pro Tempore Cindy Circo.

"We’re damn lucky to have the private sector do it," Circo said. "There was no way I could get a bond issue passed for this."

Google Fiber offers three options to Kansas City consumers. There's a free broadband internet option for seven years after a $300 installation fee or $25 per month for a year; a 1-gigabit per second Internet option for $70/month; or for $120/month, 1-gigabit per second Internet/TV bundle. It’s a hell of a deal for middle class consumers who want faster Internet.

It’s a tougher sell for people struggling to make ends meet, as Erica Swanson, head of community impact for Google Fiber, acknowledged in a blog post that came out on the same day as the Wall Street Journal’s survey.

Swanson’s blog post argued that Fiber is "available to anyone in a fiberhood who wants it, regardless of income." This is still untrue in Kansas City for a couple reasons.

The first is price. Even though Google Fiber offers a comparatively low price point for high-speed Internet service, it’s not low enough for many. "Google says they wanted to help with the digital divide, but I don’t think they realized what that meant and what little impact they would have," said Michael Liimata, president of local nonprofit Connecting for Good. "Google Fiber is turning out to be a product for middle-class folks who are already using the Internet." Liimatta said.

The second is access. Homeowners have to give permission for Google Fiber installation—something not all renters and nobody in public housing can do. Overall, poor people tend to rent more and move more. The Kansas City, Mo., school district anticipates 40% of their students—most of which who qualify for free or reduced lunch—will move at least once during the year, Liimata says.

Renters’ landlords often will not pay the installation cost of $300, despite the fact the deal guarantees Internet at that residence for seven years. (In Austin, another Google Fiber city, Google offers some people in public housing the option to sign up.)

Another issue in the digital divide is perception: high-speed Internet often isn’t seen as a necessity. "People focus on feeding people, finding jobs, those end-state social services," said Kansas City Digital Drive Managing Director Aaron Deacon, who heads up a regional effort to make the best use of fiber technology in both states. "There’s a little bit of a gap still, in people understanding how using technology tools can achieve those end goals." (On that front, Google has made progress, greatly raising the profile of their product in poorer KC neighborhoods.)

Picking Winners

The arrival of Google Fiber comes in a wave of decisions, starting at the city level. On March 30, 2011, Google picked Kansas City, Kan. to be the first Google Fiber community from more than 1,100 applicants. Seventeen days after that announcement, Google announced Kansas City, Mo., would also be included.

Prior to the announcement, the cities knew they would be working together, but they couldn’t sync the legalities regarding the utilities across state lines.

"I was really disappointed that we didn’t announce it together because it was one region. We were excited to be partners with Kansas City," Circo said.

Once the city is picked, Google goes about picking the specific neighborhoods that will be given access to the company’s superspeed Internet. "There was a lot of learning," Google Fiber Field and Marketing Manager Carlos Casas said. "This was the first Google product that required some face time to explain it."

And sometimes they didn’t explain it well. When the product launched, they had no Spanish-language marketing materials or website, in an area with a long-established Hispanic community that comprises 10% of the population. Google reps tried to entice people to sign up service in minority-dominated areas where many people weren’t in the traditional banking system, asking for a credit or debit card number to enroll as they canvassed neighborhoods.

Google also paid little attention to logistics as it began building the network "to demand"—starting with the neighborhoods that had the highest percentage of signups. "It proved to be a nightmare in terms of deployment," Casas said.

Throughout the process, Google seems to have applied the startup principle of "fail fast" to its first fiber endeavor. For the second round of fiber installation, the company says it is paying more attention to logistics when it comes to the infrastructure buildout.


Going Into The Homes Google Missed

Once the Google Fiber footprint in KC was clear, local nonprofits began to form to fill in the gaps. Liimata’s Connecting For Good created their own Internet network.

"We want every kid east of Troost to have the same opportunities and possibilities as the rich kids have," Connecting for Good COO Rick Deane said, referencing Troost Avenue, the city’s north-south thoroughfare that has historically divided whites and minorities.

Connecting For Good is part of a wider KC Freedom Network, which describes itself as Kansas City’s Wireless Co-Op, founded by Isaac Wilder, who set up a mesh network for Occupy Wall Street demonstrators in New York in 2011.

Connecting For Good buys bandwidth wholesale and uses microwave technology with already existing telephone towers across the region to provide high-speed Internet.

This wireless mesh network reaches about 500 low-income households. Its speed won’t come anywhere near Google’s 1-gigabit per second, but the network offers free Internet access to those who might not be able to afford it otherwise.

Connecting For Good also operates free wireless networks at Rosedale Ridge and Juniper Gardens, two low-income housing projects in Kansas City, Kan., as well as at Posada del Sol, a senior high-rise in Kansas City, Mo. The network at the Juniper Gardens public housing complex covers more than four city blocks.

"We go where Google is not," Deane said. "The heart of the problem is the heart of opportunity."

A Path for Entrepreneurship

KC has succeeded in spurring startups, through a mix of Google’s product and new pro-business policies. Consider 33-year-old Kyle Ginavan, who waters the lawn with one hand, and holds a cell phone to his ear with the other, brokering deals in the hot, summer sun.

To the passersby, the century-old house on Cambridge Street that Ginavan is standing in front of barefoot looks like an average fixer-upper home in an up-and-coming neighborhood. But the red flag emblazoned with a tic-tac-toe-like symbol with the letters "KCSV" in each square signals that Ginavan’s NexusHQ is yet another business in the Kansas City Startup Village.

The company, founded by Ginavan, moved in the neighborhood near 45th Street and State Line Road in mid-January, after redoing much of the home’s interior. The NexusHQ house is now also home to two other startups: Agora and D3 Automation.

The sunny new setup beats the flat, uninspiring atmosphere of his former 10 by 10 space in a "stuffy, corporate, typical, commercial building," Ginavan said.



The unified government of Kansas City, Kan. and Wyandotte County allow these businesses to remain residentially zoned as long as at least one person lives in the house. They’re also not allowed to have signs outside, hence the flags.

"I don’t know if we would be here if it wasn’t for Google Fiber," said NexusHQ Co-Founder Mark Chai. He and his wife recently relocated from New York City to Kansas City after the company established its new headquarters.

"I’m often inspired about how Apple started in a garage in Palo Alto, in a neighborhood like this, 30 years ago," said Chai. "I think there’s a romanticism happening right now, where we’re building something bigger than us."

Courting small business has turned into a full-fledged community effort in Kansas City. Every Wednesday from 9 to 10 a.m., the Kauffman Foundation is packed with hundreds of local caffeine-drinking entrepreneurs eager to listen to the weekly presentation where other small businesses share their models, successes, and failures.

Google isn’t the only behemoth pushing to make KC work. Sprint launched its accelerator program this year in part because, as its mission statement said, "the legacy of entrepreneurship, paired with the startup buzz catalyzed by Google Fiber, has created a collaborative, innovative working culture in KC." Ten startup companies worked in the Sprint Accelerator facility in March, and debuted products in June.

Competition And The Future

The bigger conversation, both for Google and cities across the country, is: What’s next? For Kansas City consumers of means, Google seems to be working.

"Consumers are highly satisfied with Google Fiber service, suggesting its share gains are likely not done yet," wrote Bernstein researchers Carlos Kirjner and Peter Paskhaver. And service is still expanding in the greater Kansas City area. In November, Google announced its launch of a product line for small businesses in central Kansas City, Mo., and Kan. Google will move into consumers' homes in Overland Park, Kan., in 2015.

The power of Fiber seems to have prompted not just activists, but cable companies, to push for better access. In August, both Comcast and Time Warner Cable (TWC) announced that they would be increasing Internet speeds for customers in Kansas City, among other cities, at no additional cost to the consumer. Customers who pay for 25 megabits per second (mbps) service will be upgraded to 50mpbs, customer who pay for 50mpbs will get 105mpbs, and customer who were paying for 105 will now see 150mpbs.

Now that the carnival of Google Fiber’s launch has moved to other cities, the underserved in KC are still largely underserved—but some have better access than they had before. The cable companies are offering a little more value to their customers. The business community has become a magnet for talented people across the Silicon Prairie. And the startups those talented people create will probably dictate, in the end, if Google Fiber is as big a deal as Kansas City hoped it would be.