Greg's bite: indirect economics, 1 Gig for KCK
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Greg's bite: indirect economics, 1 Gig for KCK

By Greg Mills

The ballyhoo that went up when Kansas City, Kansas, won the Google 1 Gig lottery was based upon the anticipated economic effects we hope to see here. Kansas City, Kansas has suffered from the recession, much like the rest of the country.  

Unemployment is a major issue for 9% of us. Real estate values have also suffered dramatically.  The effect of the Google network coming to town is a complicated parameter with possible side effects no one can fully foresee, most of them good. 

To our established local cable TV company, the Google 1 Gig network is an economic disaster. I have a TimeWarner Cable modem Internet bill on my desk as I write this for US$50 that will soon go to Google instead. No one is going to put up with the intermittent 6 Megs a second cable modem when they can have 1000 Megs a second on a more stable fiber optic network. Google promises to sell 1 Gig symmetrical Internet for current broadband prices to everyone. How do you compete with that when you are stuck with an out of date, co-axial, wired network?

In Chattanooga, the fiber optic internet speeds are prices in tiers. You pay $57.99 for 30 Mbps (Megabytes per second), $69.99 for 50 Mbps and $139.99 for 100 Mbps. For a full Gig you pay $350 a month.  Cable modem providers there can compete with $39. a month for cable broadband in Chattanooga. In Kansas City, Google is undercutting them at the ankles, offering a full Gig for a cable modem price point to everyone.  

Commercial real estate brokers here are excited, anticipating new companies moving into town to hook up to the super fast Internet we will soon have. One broker mentioned at a Google town meeting the other night that her phone was ringing off the hook from business people from out of the area who were interested in commercial vacant land. That is way cool. We have abundant vacant land, relatively low land prices, an eager-to-accommodate new business city administration and now super fast Internet at bargain prices. Sounds like a winning combination to me.  

As part of my research for this article, I contacted commercial real estate brokers in Chattanooga, Tennessee, to find out what happened there when the Department of Energy provided $111 million dollars for them to put in 1 Gig fiber optic Internet. Their system was turned on a bit over a year ago. The first broker I spoke with discounted the fast Internet and said that he hadn't seen any effect at all. His firm hadn't even hooked up to the new fiber optic Internet since cable modem was cheaper.

The second Chattanooga broker I spoke with said that her firm had sold vacant land to Amazon.com for a new data center and to Volkswagen auto for a new plant.  Amazon needed to hook up to the Internet backbone at a point where they could manage serious data traffic for data streaming businesses they are developing. Volkswagen wanted to be able to view virtual auto parts with Germany in real time. The broker knows for a fact that the thing that "sold" the deal in both cases was the fast Internet. They had vacant land and priced it competitively, but super fast Internet is very attractive to companies that can use it.

The local job situation in KCK will certainly be helped long term. A collective sigh of disappointment came up from the town meeting crowd (estimated to be from 500 to 1,000 depending on whom you ask) when the Google rep stated that they were not going to hire more than perhaps two locals to run the new system. They will be doing  the customer service on-line remotely and will contract nationally for the best deal for the fiber cable construction work.  Surprising little economic effect from direct hires is anticipated from Google.

If, in fact, high tech companies are coming to town due to the new fast Internet, we will see long term employment increases rather than just short term jobs. Educated people are most likely to get the good jobs, but even low paying jobs such as janitorial will see more demand with more businesses in town.  Our motels and stores may see more business generally, over time. Food service companies will serve more meals, gas stations pump more gas, etc.  Tax rolls will be helped as well.

Kansas City can certainly roll out the red carpet by being helpful to new companies coming to town by exercising restraint in adding tax loads to business and commercial property.  KCK has actually given sales tax wavers to tempt new businesses to come into town.  Such inducements go a long way in developing the long term favorable business situation for our town.

The local universities and colleges will certainly be likely to enhance or add majors related to high speed Internet applications. Once the system is built out, the interesting creative environment Google is providing will have been established. Then, we will see what new innovation pops up.  

I am of the opinion that along with the generous 1 Gig at broadband prices being offered by Google, a free Wi-Fi network in the poorer areas of town will serve our community well. Kids get free loaner MacBooks from the school district, but have to go to McDonalds for access to the Internet, since their families can't afford cable modem service. The promise of fast Internet for the entire city is very hollow for those at the bottom of the economic heap. Knowing there is 1 Gig fiber optic cable going down the street won't matter if the families on welfare can't afford to hook up.

Google put a city wide Wi-Fi system in for a wealthy suburb of San Francisco called Mountain View. City street lights and phone poles had Google owned Wi-Fi devices mounted on them.  Google spent about a million dollars putting the system in for an area of about 12 square miles.  They even pay the city of Mountain View $36 a year to rent space on each of the phone poles they use.  

Google's deal with KCK is for free access to all city owned utility property including utility poles and light poles. The system in Mountain View used a total of about 380 Wi-Fi "nodes." Newer transmitters have wider coverage and since KCK gives Google free access to city owned poles, the cost would be much lower to help our poor folks with free Wi-Fi. With the Internet fiber already planned for the neighborhood, hooking up local Wi-Fi routers would be a natural step. If Google won't do it, perhaps the city should. 

That's Greg's Bite for today, coming to you from KCK.

(Greg Mills is currently a graphic and Faux Wall Artist in Kansas City. Formerly a new product R&D man for the paint sundry market, he holds 11 US patents. Greg is an Extra Class Ham Radio Operator, AB6SF, iOS developer and web site designer. He's also working on a solar energy startup using a patent pending process for turning waste dual pane glass window units into thermal solar panels used to heat water see: www.CottageIndustySolar.com Married, with one daughter, Greg writes for intellectual property web sites and on Mac/Tech related issues. See Greg's art web site at http://www.gregmills.info He can be emailed at gregmills@mac.com )

 

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