Is Google a wolf in sheep's clothing to ISPs?

Google says its plan to build new fiber networks will promote innovation in broadband technology, but its moves could be seen as a threat to existing broadband operators.

Is Google a friend or foe to Internet service providers? It's a question many broadband providers are likely asking themselves on Wednesday, after Google's announcement that it will build fiber networks in communities across the United States to test new broadband services and capabilities.

Google says the new ultrahigh-speed fiber networks it plans to build will be used as a test bed. But some broadband providers are likely suspicious of Google, as the Internet search giant once again creeps onto their turf.

Google says it does not want to get into the ISP business.

Its announcement, Google said it plans to work with local and state governments to build fiber-based networks that will serve between 50,000 and 500,000 people with broadband service, offering speeds of at least 1 gigabit per second. Few details about the project are available. But a Google representative said the fiber-based networks are similar to what Google is doing with the Wi-Fi network it has built in Mountain View, Calif.

That network, which went live in 2006 , provides free Internet access, with speeds up to 1 megabit per second over Wi-Fi.

"The goal is to work with interested communities, and to experiment and learn ways to make broadband better, faster, and more accessible," the representative said in an e-mail. "We will welcome other providers to offer services over our open network. And we hope to make public what we learn through this experiment so that other providers can benefit."

In an interview with The New York Times, Richard S. Whitt, Google's Washington, D.C., telecommunications and media counsel, denied that Google is trying to compete with Internet service providers. Instead, he said Google merely pushing the industry to offer faster Internet service at a lower cost.

"We are not getting into the ISP or broadband business," the newspaper quoted him as saying. "This is a business model nudge and an innovation nudge."

Clearly, Google has a vested interest in ensuring that more people get access to broadband at a low cost and at faster speeds. The search engine giant makes money through advertising. It turns clicks and page views into money by providing advertisers an audience for their products and services. The more people who are able to access Google's search engine, e-mail, maps, and other applications, the more money the company makes.

When Google first announced that it would launch the free Wi-Fi network in Mountain View, many people in the industry speculated that Google would try to become a competitor to wireless operators. The same fears were echoed when Google said it would partner with EarthLink to build the citywide Wi-Fi network in San Francisco. And many people feared that Google was trying to get into the wireless business in 2007, when it bid on wireless spectrum in the Federal Communications Commission's 700MHz spectrum auction.

So far, Google hasn't become a service provider. In fact, the company admitted after the spectrum auction that it didn't want to own the spectrum; it bid on it merely because it wanted to ensure that a minimum price would be reached so that open Internet rules on those licenses would go into effect.

Google's latest move, likewise, may be its way of pushing the broadband industry to deploy more fiber and invest more in networking infrastructure.

"As with some of the things that Google has done in the wireless space, this 'experiment' could be Google's way of pushing the telcos to more rapidly increase their own fiber deployments," Benjamin Schachter, an analyst at Broadpoint AmTech, said in a research note.

For now, broadband providers aren't reacting much publicly. Most broadband providers declined to comment. But Verizon Communications, which has spent billions of dollars on its own fiber-to-the-home network, welcomed Google to the table.

"The Internet ecosystem is dynamic and competitive, and it's delivering great benefits to consumers," the company said in a statement. "Google's expansion of its networks to enter the access market is another new paragraph in this exciting story."

The National Cable Association simply said, "We look forward to learning more about Google's broadband experiment in the handful of trial locations they are planning."

People in Washington wonder if Google's move is political. The company is currently lobbying the FCC to adopt stricter Net neutrality regulation. The FCC closed its public-comment period on the new regulation last month. It's now working on drafting the exact language of this regulation.

At the same time, an FCC task force is also developing a nationwide broadband policy , which it will deliver to Congress next month. The plan will provide policy recommendations to Congress to help get broadband access to every American.

FCC Chairman Julius Genachowski applauded Google's announcement.

"Big broadband creates big opportunities," he said in a statement. "This significant trial will provide an American test bed for the next generation of innovative, high-speed Internet apps, devices, and services."

On the same day that the company announced its fiber test bed, Google CEO Eric Schmidt talked about the nation's need for better Internet access in a Washington Post op-ed, calling it a matter of national competitiveness.

"High-speed Internet access must be much more widely available. Broadband is a major driver of new jobs and businesses, yet we rank only 15th in the world for access. More government support for broadband remains critical," Schmidt said.

Still, broadband providers have reason to question Google's motives and its future plans. Google's citywide Wi-Fi project with EarthLink in San Francisco didn't fail because of Google. It failed because it lost the support of city politicians and EarthLink. EarthLink disbanded its entire citywide business unit and sold all of its citywide Wi-Fi assets.

Google's own investments also indicate that the company is interested in alternative broadband networks. A prime example of this is its investment in Clearwire , a company building a nationwide 4G wireless network. This company is a direct competitor to AT&T and Verizon, which offer fixed-line and wireless broadband services.

Comcast and Time Warner Cable are partners with Google in the Clearwire venture. But these partners could one day turn into competitors, if Google decided to sell or resell 4G wireless service, along with a fiber service to homes and businesses in Comcast or Time Warner Cable territories.

Even if Google isn't planning to compete with broadband providers in the near future, it recognizes that network operators may still feel threatened. This could be why the company has hired Jim Baller, president of The Baller Herbst Law Group, as a consultant. Baller, who is working with Google on this project, has been battling incumbent broadband providers for more than a decade, helping municipalities develop projects to build-fiber-to-the home networks in their communities.

Incumbent phone companies and cable operators have lobbied state governments to pass laws to stop these deployments. Some companies, such as Qwest Communications International and BellSouth, which is now owned by AT&T, actually sued municipalities to stop some projects. Baller has been involved in many of these cases, defending municipal clients against phone companies and cable operators.

In some instances, the incumbent service providers have been successful. But in other instances, they have not. A handful of municipally owned fiber networks around the country have won their battles with incumbent network operators, including one in Lafayette, La., and another high-profile network called Utopia, which connects several communities in Utah. With new federal funding pouring into communities as a result of President Obama's stimulus package, a new wave of projects is emerging.

Tensions between broadband service providers and Google already exists, despite how Google spins its intentions for its latest project. AT&T, in particular, has gone on the attack, accusing Google in an FCC filing last year of trying to skirt the very Net neutrality principles Google has promoted.

For now, it's too early to say whether Google will eventually be a friend or foe to Internet service providers. But one thing is clear: broadband providers will be keeping a close eye on Google.

 

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