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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In a blog post Wednesday evening, Time Warner said that existing customers with its standard cable package or above can log onto a city-wide Wi-Fi network the cable company is building out. Why now? Time Warner cites Google Fiber’s plans as a reason to kick its free Wi-Fi project into gear.

We’ve been rolling out our free WiFi network across our footprint for some time now, as part of our larger strategy to offer significantly more value to our Internet subscribers. Austin was in the game plan for 2013. But Google’s recent announcement encouraged us to deploy our network more aggressively now. As I mentioned a few weeks ago, we’re ready to compete.

While paying $70 for 30 Mbps internet service from Time Warner Cable and now getting free Wi-Fi around town is nice, if Google offers me a deal where I get a gigabit connection for anywhere near the Kansas City price tag of $70, free Wi-Fi isn’t going to stop me. It won’t even make me pause.

Still while, I wait to hear where Google will deploy fiber and how much it will cost, I’ll gladly check out the TWC Wi-Fi network. So far it’s only in a few locations, but the company plans to expand it around town. Customers can sign into the network, called TWC WiFi and use same username/password combo they use sign log into their account. Non subscribers can also pay $2.95 per hour for access. Subscribers also get access to other Wi-Fi networks in cities including New York City; Los Angeles; Chicago; Philadelphia; Atlanta; Baltimore; Boston; Washington, D.C.; San Francisco; Orlando; Kansas City; and Charlotte.

As far as responses to the threat of Google Fiber go, Time Warner’s is immediate and measured, especially when compared to AT&T’s. AT&T — with its fiber-to-the-node connections that currently top out at 24 Mbps — has a lot less than TWC has to offer when it comes to fending Google’s gigabit speeds. And after the 2009 experiment in broadband caps that Time Warner Cable attempted in Austin, it’s nice to have the city singled out for a benefit instead of a punitive pricing plan.

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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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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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I asked several people in town for their reaction and thoughts on the news, and I’ve collected the responses here. Here’s what Austin businesses are saying about Google Fiber:

Luis Esteban Caffesse, co-founder of the video production shop Pitch Productions, can’t wait to watch Netflix while uploading client videos after hours:

I can tell you this — the single biggest bottleneck in my work everyday is my internet speed. It’s not my productivity, it’s not my computer’s render times. It is simply the amount of time it takes me to get video content to my clients. Having something with the kind of speed that Google Fiber offers can make the difference between hitting a deadline or not… or between getting a client a copy of their video today or tomorrow.

Internet service is the ONE service in my life that I am more than willing to pay for… but there simply isn’t anything fast enough, even if there were someone willing to take our money.

Brazos Hall in Austin where Google made its announcement.

Joshua Baer, the executive director of the Capital Factory incubator and Chief Innovation Officer at Return Path, is looking forward to the day he can stop waiting on the network to catch up to today’s hardware and software:

To geeks and creatives, having a fast internet connection is right up there with a big monitor and a nice chair. It’s one of the most important factors in job satisfaction and productivity for knowledge workers. At Capital Factory we have one of the fastest Internet connections around. It’s half as fast as Google Fiber and costs $4,000/month compared to $70/month for Google Fiber.

There are three direct benefits Austin will see from Google Fiber. One, Google Fiber will attract more talented workers and innovative entrepreneurs. Two, companies will choose to launch innovative new products in Austin where the market is most receptive and consumers have the infrastructure needed. This means more marketing dollars spent in Austin, more press and attention, and early access to technology for our residents. And finally, the next generation of technology that takes advantage of this new infrastructure will be conceived and developed in Austin.

Austin streets during SXSW 2013.

Kyle Fox, the director of the Austin Technology Incubator‘s IT and Wireless Portfolios, thought more about the bigger picture of a gigabit:

Google Fiber replaces MoPac as Austinites’ quickest route to work. We could no longer have a work commute, nor would we have to wait at the doctor’s office. This will dramatically change how we as humans interact with each other and with the core infrastructure we interact with on a daily basis.

Zach Richardson, a co-founder and CTO at the Daily Dot, an online publication based in Austin, thinks it will make his staff more productive and help recruit developers to town:

Almost everything in my life is somehow connected: workout logging with Map My Fitness, scanned physical mail delivery with Outbox, or HD streaming for TV. Right now I can’t watch TV in HD (streaming) and do some of my work at home at the same time. I had already been looking at multiplexing UVerse and TimeWarner to squeeze a little bit more bandwidth at home.

For any tech-focused business, recruiting and finding talent is one of the hardest things to do. I regularly look at ways I can squeeze every little bit of productivity out of the already existing team we have. This means eliminating non-break idle time. Fast computers and good tools are a large part it, but one of the main bottlenecks (and hardest to solve) is internet speed. It will also help with recruiting in Austin. Engineers want to live and work where they can focus on code and solving interesting problems, not waiting on the internet.

I’d say that personally and professionally these people are excited. I am too.

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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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In the meantime, check out our stories on what this could mean for Austin and broadband development in general.

• The economics of Google Fiber and what it means for U.S. broadband
• Google Fiber is coming to 90% of eligible Kansas City neighborhoods
• As Austin readies for Google Fiber, here’s why you need a gig: even if you don’t think you do
• A quick look at Google Fiber pricing v. the incumbents
• The downsides of a gig: what other towns have learned after getting a gig

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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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