CenturyLink is upgrading its existing fiber architecture in west Omaha using GPON and will serve homes and businesses. Residential customers can bundle the gigabit speeds with existing video and voice service for $79.95 or subscribe to standalone service for $149.95. CenturyLink competes against Cox Cable in Omaha, which offers a 150 Mbps service.

This is a pilot project for the telco, and will cover its 48,000 customers in Omaha. When I asked CenturyLink why it was upgrading to a gigabit, a spokeswoman emailed the following:

CenturyLink needed to upgrade its existing fiber architecture in Omaha and wanted to create a more robust network that delivers fiber optic cable directly to homes and businesses. …We will evaluate our 1 Gbps offer to determine further deployment of this advanced technology.

Better broadband = More innovation

As a broadband reporter with a passionate belief that more broadband is better for our society and our ability to innovate, I’m thrilled to see more and more companies testing the waters on speed upgrades.

When Google launched its roll-out plans to build out a gigabit network in Kansas City, it showed that it was willing to enter a capital-intensive business in order to protect its access to the consumer. At that time, ISPs were implementing caps and making a lot of noise about bandwidth hogs and the cost to upgrade networks for people watching video over the top.

Yet, after Google announced Austin, Texas in April as its second location for Google Fiber, AT&T issued a press release saying it too wanted to use Google’s tactics to lay fiber to the home in Austin. It remains to be seen if AT&T takes those steps, but it’s great to see AT&T considering it. A week after Austin, Google said it purchased the fiber network in Provo, Utah (it apparently cost Google $1) and planned to turn on a gigabit network later this year. In Kansas City, Google charges $70 for gigabit-only service and $120 for a gigabit plus TV.

Municipalities and smaller telcos are also getting in the game. Last Friday I covered Vermont’s telco, VTel, and its existing gigabit network that residents can connect to for $35 a month. In a talk with the CEO of VTel, he told me that the he thinks that gigabit fiber is the only way to bring residents and his business into the future. But his $151 million investment costs were offset by $94 million in government loans and grants.

Meanwhile, Century Link isn’t totally throwing its conservative talking points to the wind. In the release announcing the gigabit construction it added a note of caution:

The company will evaluate its Omaha 1 Gbps offer before determining further deployment of this advanced technology, considering such factors as positive community support, competitive parity in the marketplace and the ability to earn a reasonable return on its investment.

I’m curious about all of those things myself. If a traditional telco can invest in gigabit networks and charge a fair rate for them, then I’ll expect to see them pop up in more places. And not just in places targeted by Google.

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So far, it’s offering about 500 residents gigabit speeds for $35 a month and plans to cover its 17,500 customers by the middle of 2014. That’s about the same time Google plans to start offering gigabit service to its first Austin residents, and means VTel will be hooking up 200 homes to the network each week. So when we counted gigabit homes earlier this week, Vermont likely supplied a few.

VTel’s transition from POTS (plain old telephone) to photons was made possible in part from the broadband bucks the federal government allocated as part of the American Reinvestment and Recovery Act in 2009. Thanks to ARRA grants totaling $94 million, plus matching grants from the local utility that wanted to use the planned network for smart grid deployments and its own investments, VTel has spent over $150 million building out more than 1,200 miles of fiber.

VTel uses Alcatel 100 gigabit routers at each of its 14 rural central offices serving its GigE customer base

VTel also operates a 100 gigabit per second backbone in the North East with peering points in New York City, Boston and Montreal, which supports the network and provides redundancy via alternate routes. Inside the home Vtel has to upgrade the equipment it offers consumers to match the gigabit speeds coming into the house. It purchased Actiontec routers for inside the homes, and now its customers are typically experiencing speeds of 925 Mbps to 950 Mbps.

VTel CEO Michel Guité, told the Wall Street Journal that the growth of Google Fiber helps him get approvals for the federal grants to upgrade the network. From the article:

That comes as Google’s Fiber project, which began in Kansas City and is now extending to cities in Utah and Texas, has raised the profile of gigabit broadband and has captured the fancy of many city governments around the country.
“Google has really given us more encouragement,” Mr. Guité said. Mr. Guité said he was denied federal money for his upgrades the first time he applied, but won it the second time around–after Google had announced plans to build out Fiber.

Most tellingly however, was Guité’s quote to the Journal where he says it remains to be seen if this is a “sustainable model.” Selling broadband access for $35 may be possible if much of your deployment costs were covered by federal grants, especially in a rural area where homes are spread out. Generally the more dense a population, the lower the broadband deployment costs, which generally translates in higher monthly bills for customers. But since customers aren’t sure why they need a gigabit yet, getting too far ahead of demand can mean VTel spends money to upgrade before customers want to pay money for the product.

VTel is scheduling community meetings to educate people about the benefits of having a a gigabit network as part of a drive to get customers to sign up. However, for those that are leery about living so far in the future, VTel still offers customers dial up access for $21.95 a month. Now, that makes for a digital divide.

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It turns out that between the first of this year and April 8 (when I got the data from Ookla) roughly one in 10,000 devices in the U.S. are surfing at gigabit speeds and roughly 1 in 5,000 homes worldwide can match them. Ookla runs the popular Speedtest.Net service and got this data from users who tested their connections during that time period.

Unfortunately, the data on this is relatively inexact, because the art of measuring a gigabit is complicated. As late as last summer when Google launched the first plans for a fiber to the home buildout in Kansas City, the search giant had to work with Ookla to upgrade the test to even be able to read a gigabit. Even so, some customers with a gigabit might not show up because their Wi-Fi routers or computers can’t achieve those speeds and, thus, throttle them back to a mere 100 Mbps or so.

And the numbers provided by Ookla actually measure customers with speeds of above 800 Mbps, which is what it classifies as a gigabit. In the U.S. only 4,110 people have test results at that speed out of 45,468,731 people who used the Ookla tests. Globally, 34,721 users have speeds that high out of 224,404,945 tests. But, clearly not every broadband user is running Speedtest.net or has the right equipment.

Ookla also provides data on the number of people whose connection speeds are 300 Mbps or greater. In the U.S. this was about 51,100 devices or about 11 in every ten thousand users. Globally it was 204,315 devices or 9 in every 10,000 users.

For additional data points, we can turn to the Fiber to the Home Council, which said a few weeks ago that 640,000 subscribers are buying connections of 100 Mbps or more across North America. That’s a significant number, although the FTTH Council is measuring capacity that is 10 times less than what a gigabit connection can offer. For reference, the FCC in February noted that the average U.S. subscribed broadband speed is now 15.6 Mbps, representing an average annualized speed increase of about 20 percent. And below is a chart from FCC data at the end of 2011 showing the distribution of broadband speeds at the time.

This chart measures both wireless and wireline speeds as of Dec. 2011.

But it looks like the FTTH Council — as well as Google’s experience in getting 90 percent of the neighborhoods in Kansas City signed up for fiber — can tell us something definitive about gigabit connections: People want them. When fiber-to-the home is offered 44.8 percent of the homes passed take the service. Given that those are generally the most expensive connections, that’s a pretty high take rate.

So it looks like even a few thousand Kansas City, Austin, Texas or Provo, Utah homes connected via Google Fiber will not only significantly change the percentage of gigabit customers in the U.S. but also around the globe. Still, we have to start somewhere.

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Google last week at the Broadband Communities Magazine’s Summit in Dallas told attendees “don’t wait for us” or even the Federal government to bring broadband to communities. “You have to take action, make changes, be creative,” said Milo Medin, Google Vice President for Access Services.  “Your community can have a gigabit future if you want it badly enough”

So rather than Mountain View, Calif., maybe communities should be looking closer to home for broadband love from mini-Googles.

The mini-Google model for community broadband

People often ask what Google gets out of building these networks. They forget that Google is in the online ad business as well as several other ventures that collectively generate more revenue as gigabit Web surfing increases. It’s likely a safe bet that Google is driven more by these businesses’ needs than the desire to be a national service provider. For now.

Rather than “What does Google get?” smart communities need to ask, “Are there other companies whose businesses would benefit from faster, better broadband? Companies that benefit to the point where investing in community networks make sound business sense? Maybe some of these potential “mini-Googles” are local.

San Leandro, Calif. has its hometown Google, OSIsoft. Similar to Google, OSIsoft is a tech company that is building fiber infrastructure to bring gigabit service to a town that definitely wants and needs broadband. Broadband service is not OSIsoft’s core business. Yet, as a San Leandro-based company, OSIsoft benefits tremendously from delivering a gigabit to its neighbors as well as itself.

A couple of years ago OSIsoft was in a bind. The $250 million company had been a member of the San Leandro community for over 30 years. Dr. Patrick Kennedy, OSIsoft’s founder and CEO, as well as many of his 800 employees live in the city. But the company needed a few hundred megabits faster broadband than the incumbents were willing to deliver to the town, and without it OSIsoft would have to move.

OSIsoft and city government officials formed a public private partnership and got creative. As the result of an earlier transportation project, the city had available conduit around the town that it offered to the initiative. Bay Area Rapid Transit (BART), which has two stations in town, had extra dark fiber that it made available. Kennedy hired a contractor to pull 288 strands of fiber through the conduit, 28 of which were given to the City for its use.

The end result of this effort was an 11-mile fiber ring around San Leandro that OSIsoft and other local businesses are using. San Leandro Dark Fiber LLC is the company Dr. Kennedy created to build out the infrastructure. Lit San Leandro is another company created to install the switch and routing facilities that light up the network for business subscribers. Cross Links System is a local ISP selected to provide Internet access and other services to businesses. The City currently is formulating plans for leveraging its share of the fiber to impact local economic development. Residential constituents currently are not served, but they likely will be considered during the economic development planning.

Find your hometown Google

What San Leandro has achieved is replicable in other communities. One good example is in upstate New York where Corning invested $10 million in a 235-mile fiber ring covering three counties. Corning’s business operations based in this area and its workers benefit directly from much needed broadband capacity, and indirectly by boosting the economic development of the communities around them. Since Corning produces fiber, this project delivers marketing value as a showcase for the power of the gigabit.

Joe Crookham is a successful business owner in Muscatine County, Iowa whose Musca Lighting financed fiber buildouts for his and several surrounding communities. These services are sold to businesses and residences. Informally, Crookham has waved the community broadband flag at the state legislature.

The key is to find a business or a group of businesses that are feeling the pain of not having sufficient broadband. According to Dr. Kennedy in a Gigabit Nation interview, “many urban areas are ‘copper towns,’ meaning the incumbents have built DSL or T1 lines that cover these communities’ residential users. But businesses and industrial parks need much more capacity than this as we see an explosion of data applications and cloud services. Incumbents generally see little value in serving these commercial operations.” Companies in technology, science and healthcare represent low-hanging fruit in alternative-funding partner searches.

However, along with the promise of these mini-Googles, there is a significant caveat for communities. Even though many local governments and local economies are struggling for money, they must resist the urge to close a deal at any cost. Stakeholders must maintain control of the business of broadband, that process by which communities use the technology as a tool to improve economic development, transform education and expedite healthcare delivery. Owning this process, whether or not they own the physical infrastructure or services, is how communities reap significant broadband benefits.

As the surging wave of gigabit initiative builds, we should expect to see a corresponding increase in creative public private partnerships. But the bottom line is that all negotiators of these deals should keep in mind that “private companies have to make money, and reinvesting in the public interest is always going to be a secondary concern,” states Forbes blogger McQuaid. Smart negotiating and planning, though, is how everyone wins.

Craig Settles is a consultant who helps organizations develop broadband strategies, host of radio talk show Gigabit Nation and a broadband industry analyst. Follow him on Twitter (@cjsettles) or via his blog.

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Those reasons include an updated web site, attributes the city shares with Austin, such as universities, and the fact that Provo previously attempted to build a fiber to the home network as part of a public-private partnership called iProvo. The network experienced financial troubles and parts of it were later sold to Broadweave, a private company before ending up in the hands of Veracity Networks. Apparently, those network assets changed hands about a year ago and were purchased by the city. That means the city is working with Google to provide the underlying dark fiber.

The deal still awaits approval from the Provo City Council as well as more details from Google on the roll out, pricing and the deployment. Since Provo does have its own fiber network Google says it will provide its Free Internet service (5 Mbps speeds) to every home along the existing Provo network, for a $30 activation fee and no monthly charge for at least seven years. In Kansas City the service is provided for free with a $300 connection charge.

Google’s Kevin Lo says the first residents will get connected later this year.

Google’s announcement significant for a variety of reasons — not the least of which is that Google is planning to keep pushing its gigabit network to more places. It already is building a fiber to the home network in Kansas City, Kansas and Kansas City, Mo. But it also signifies the changing cost-benefit equation that municipalities and private companies are facing when it comes to fiber to the home networks.

More municipalities from North Carolina to Seattle are trying to entice gigabit networks to their areas using a combination of leasing existing city assets or tax breaks for newcomers. Companies like Google and Gigabit Squared are trying to take advantage of the willingness of city officials to deal and the underlying assets in those cities, but even companies like AT&T and Time Warner Cable are also starting to play ball.

The nature of network deployments are changing, and hopefully it will change the cost models to the point where more fiber to the home networks can become viable. However, it’s important to remember that private companies must act responsibly to their shareholders, while cities are accountable to their citizens. That’s a mix that might explode later on.

This story was updated at 2:28 PT to correct information about iProvo’s history.

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Ma Bell announced its gigabit plans on Tuesday after Google said it planned to offer its own fiber to the home, gigabit network to the Texas capital.

I got on the phone with Larry Solomon, an AT&T spokesman to get details on the network. Solomon said that AT&T will expand its existing fiber-to-the-node product to “homes and buildings.”

In its release AT&T also said that this expansion wouldn’t “materially affect its capital expenditures for 2013,” which struck me as far-fetched. However, Solomon said, “AT&T spends $20 billion a year on capital expenditures. We don’t expect this year to be materially different.”

In further conversation with Solomon the rationale behind that statement became clear. The time frame here is uncertain and AT&T has learned a thing or two from Google on how to lower the cost of deployment.

Google Fiber trucks stringing fiber in Kansas City.

AT&T has taken a lesson from Google Fiber

AT&T executives will meet with city and state officials seeking the same concessions that Google is getting in order to build out its network Solomon said. As someone who has followed telecom in Austin, and in Texas, this mostly means the ability to cherry pick where it will deploy its gigabit network. And that points to both the upside and downside of Google’s influence.

I wrote back in July that Google has changed the economics of deploying fiber in part by its strategy of getting people to sign up in advance and then choosing to deploy where demand was greatest. This eliminates the need to pass homes that might not sign up for fiber and also lets Google roll out service to neighborhoods in bulk.

Well, AT&T wants to do something similar. AT&T would like to follow a strategy where communities help drive demand for the gigabit service, Solomon said. When I asked if that means aggregating demand and then serving those communities he said that was something AT&T was interested in.

But there’s a big downside to this plan for the end user and the cities. Having both Google and AT&T trying to convince customers to sign up for their respective gigabit service effectively splits the vote. Solomon didn’t comment on that possibility, but did say AT&T wants to offer competitive pricing and build offers around wireless and other AT&T products. Google hasn’t announced pricing for its services in Austin yet, but in Kansas City a gigabit costs $70 a month and a gigabit plus TV costs $120 per month. I’ve covered AT&T’s comparable pricing in Austin here.

Conduit, anyone?

Two fiber networks may not be what we want — or even need.

Which brings me to my larger issue with our broadband strategy in the U.S. — the lack of a plan for delivering real wireline competition. If AT&T gets its way with city and state officials and goes head to head with Google in the neighborhoods, we’re looking at what could become — at best — a network buildout in areas where people own their own homes (Google had to develop special programs for attracting landlords to commit, which made Google Fiber in low-income areas a tougher sell) and already know they want a gigabit. At worst, neighbors who are split between Google or AT&T will not meet the threshold to get a buildout, and no one gets a gig.

And frankly, it’s dumb that both AT&T and Google might spent dollars building out fiber to the home in the same neighborhoods. Will streets get torn up twice? Will your broadband provider be determined for the life of your home based on the decisions that occur during a few pre-determined fiber sign-up periods?

A better option for Austin, and what could potentially become a model for communities everywhere, would be if Google and AT&T decide to work together to lay conduit (basically pipe in which anyone could run fiber) in areas where people want the service. When I asked Solomon about this possibility he said, “I wouldn’t rule out anything, but I wouldn’t include it either.”

However, he then pointed out that with its Android operating system, Google is not just a competitor on the fiber front, but also a partner. “Google provides the operating system for a lot of devices we sell, so in that sense Google is an indirect partner and great company. We have a lot respect for Google.”

Is the new gigabit future?

For better or worse AT&T is coming to Austin to seek the same opportunity that Google has. It wants to get city officials to let it roll out a fiber-to-the-home, gigabit network in a way that lowers AT&T’s deployment costs and allows it to put fiber exactly where people say they want it. And it is happy to take this plan on the road to other places in the U.S.

“We will sit down and work with any community that allows us to reach an agreement that allows us to accelerate our telecommunications investment,” Solomon said. “

As for timing on AT&T, Solomon says that once AT&T has its agreements from the city it plans a similar style of announcement to the one Google hosted in Austin today. “We have been looking at this for some time and seeing the Google announcement is obviously a sign that is encouraging,” Solomon said. “That telecom companies and Google or whomever can work with city officials to get policies in place to see regulations and costs lowered to speed up the infrastructure is good.”

I’m not so sure this is the best way for gigabit networks to be constructed. It is clearly less efficient than laying conduit — although in the U.S. the question of who would take on that investment has rested in the hands of private companies. There are very real questions and worries about how and when all parts of a community would be served. Google faced some of that scrutiny in Kansas City when lower-income neighborhoods weren’t signing up quickly enough, but eventually said that it would roll out fiber to 90 percent of eligible neighborhoods.

However, the telecom industry has needed innovation to get it to faster speeds, and this is clearly an innovative way to try to expand network access and upgrade the infrastructure. So instead of simply getting a gig, it looks like Austin may get a whole lot more. A starring role in the battle to bring innovation and faster speeds to the broadband industry. I just hope it’s one that consumers win.

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AT&T plans to build a gigabit network in Austin, Texas according to a company release Tuesday. On any day this would be big news, but Google just announced its own plans to build a fiber to the home, gigabit network in the Texas capital. Looks like Google’s plans to tweak the incumbent broadband players is working — at least at the press release level.

Google’s Kevin Lo said earlier today that the Google network won’t be available until mid-2014 and it’s unclear when AT&T’s network will be rolled out. Larry Solomon, a spokesman confirmed that AT&T’ plans to build a fiber-to-the-home network to “homes and buildings” in Austin. However, the timing depends on how soon AT&T can work with city and state officials to roll out service in a manner similar to how Google rolls out broadband in Kansas City.

In Kansas City Google deploys service in areas where a certain percentage of homeowners have already committed to taking the service. This helps it save money on deployment, because it can avoid building out to areas where interest is low and because it can deploy “in bulk” to neighborhoods when it goes out to dig trenches and connect homes.

Currently AT&T provides a fiber to the node product called U-verse that offers speeds of up to 24 Mbps down. However, as Google expanded in Kansas City, it received some concessions around permitting that the incumbents later complained about.

As a result, both Time Warner Cable and AT&T were granted similar benefits in Kansas City. However, in Austin, the agreements that Google has signed with the City of Austin are no different than the ones that AT&T and Time Warner have signed according to Laura Morrison, an Austin city councilwoman. Yet, AT&T in its release of the gigabit network seems to imply otherwise. From the release:

Today, AT&T announced that in conjunction with its previously announced Project VIP expansion of broadband access, it is prepared to build an advanced fiber optic infrastructure in Austin, Texas, capable of delivering speeds up to 1 gigabit per second. AT&T’s expanded fiber plans in Austin anticipate it will be granted the same terms and conditions as Google on issues such as geographic scope of offerings, rights of way, permitting, state licenses and any investment incentives. This expanded investment is not expected to materially alter AT&T’s anticipated 2013 capital expenditures.

When asked about AT&T’s plans, Google’s Lo responded “We think that Gigabit speeds are the future of the Web, and we believe that choice and competition are ultimately better for users.” This is good because aT&T’s Solomon says that AT&T plans to offer “competitive” rates on a gigabit and that it plans to bundle existing AT&T services with broadband packages. Solomon was vague on timing, since AT&T needs to work with the city to ensure it can build out the way it wants to.

As an Austin resident and broadband lover, I’m ecstatic that I might soon have not one, but two gigabit capable networks. Of course, with so little known about the cost, timing or the locations of either Google’s or AT&T’s network, I’ll wait to get out my party hat.

Updated at 12:01 PT to reflect incorrect information on the AT&T plans. Updated again at 12:27 PT after AT&T clarified further that it is planning a fiber to the home network.

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But after the city and Google answer the questions about where they plan to expand, if they will employ the same tactics as it did in Kansas City and other key details, here are a few ways concerned citizens and business leaders can pry a little deeper under the surface. Getting a gig is great, but as Kansas City and other gigabit towns can tell you, there’s a big learning curve.

As Google even pointed out during its launch in Kansas City, equipment and event services such as SpeedTest.net weren’t ready to support gigabit connections. Now Ookla, which runs Speedtest.net, can support a gig, but devices like laptops that don’t support 802.11a/c standards might not. Mike Farmer, the CEO of Leap2, a Kansas City, Kan., startup that has a gig, says that his current MacBook is a bottleneck because, unless he hard-wires it, it can’t support a gig.

Is there anybody out there?

Mike Farmer of Leap2 praising the Google Fiber box.

The great thing about having a broadband connection is you are connected with billions of people around the world. But if you start building out gigabit-ready applications, or even applications that require 100 Mbps, you’re going to shrink your audience. The Fiber to the Home Council recently estimated that there are more than 640,000 North American households now receiving 100 Mbps service through a FTTH network. I’ve covered this before, but it bears repeating as Google plans to bring its gigabit service to Austin.

As Farmer says, “We have a car that goes 500 mph, but there’s only one road.” But Farmer and people in Chattanooga, Tenn. which is home to another gigabit network, have gotten together to discuss their plight and are planning to create a virtual co-working space using an always-on high-definition camera between their offices.

Farmer is part of a group of Kansas City startups renting a home in a residential area so they can play with Google Fiber. Venture capitalist Brad Feld bought a house in KC and set up an incubator program there too. However, the flip side of the entrepreneurial enthusiasm around Google Fiber is that others in town aren’t prepared for a gigabit connection.

How to handle the gigabit in civic institutions?

Aaron Deacon, managing director at the KC Digital Drive, told me that schools, for example, are trying to understand and find money for the gear they would need to support a gigabit. He explained that Google provides a gigabit drop to the school, so then the question of how to deploy that technology throughout the build or buildings is left up to the administrators. Do they just provide a computer lab where the termination point is and hope for the best, or do they invest in gigabit capable Wi-Fi access points?

These issues, from a lack of know-how to an inability to brainstorm applications, is the reason that U.S. Ignite was founded almost a year ago. the program aims to teach people what to do with a gigabit connection. The first lesson? It’s not just about speed. Jake Brewer, a spokesman with U.S. Ignite, says speed is only one aspect. Another is about giving neighborhoods the ability to control their broadband destiny.

What does a gigabit app even look like?

For example, the three things Ignite wants people thinking about is speed (upload and download), the local cloud and software-defined networking. Much like the deeply nerdy SDN stuff happening inside data centers, Brewer wants to add programmability and intelligence to the wide-area network. Advantages of this are many, from being able to easily reroute traffic on congested routes to being able to allocate network resources to a specific application to guarantee high-quality service.

As for that local cloud, it may be as simple as storing data closer to the end users or as complicated as creating a town that can harness its compute to double as a data center. For a list of awesome gigabit applications that Brewer and Ignite have helped devise, check out their post from last week.

And there’s the “downside” of getting a gig. Once you have it, the real work begins.

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Even if my earlier arguments about innovation don’t convince you that Google Fiber could help change the broadband landscape, then here’s a chart that could help. For the practical people out there, just check out the pricing of Google Fiber today versus the pricing of the incumbent ISPs in Austin.

How much broadband costs in Austin.

Comparing pricing across telecommunications services is tough, so I assembled the highest speed internet package, the TV package that offered digital cable but none of the extra premium channels and a DVR package that provided whole home DVR as Google TV does. Time Warner Cable has a box and modem fee associated with its service. Google TV doesn’t have an equipment fee but it does have a different channel line up than the incumbents.

Looking at this, Google Fiber would be more expensive than AT&T’s services until people started using more devices and requiring more capacity. However, AT&T has a cap of 250 GB per month, and despite what the salesman told me over the phone, I’m pretty sure that I do need a 24 Mbps connection today to satisfy my family members. Still, on the eve of the Google Fiber announcement I’m tempted to switch over to AT&T while I wait for the build out.

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