There’s not much to say about this uptick in spending that hasn’t been said before. Essentially, Google has to keep on spending to keep its services running as well as possible and as efficiently as possible. Competing against Amazon, Facebook, Apple and Microsoft in everything from search to mobile to cloud computing costs a boatload of cash. Rolling out Google Fiber — soon to be in three cities — certainly isn’t cheap, either.

Apples-to-apples comparisons can be tough, because everyone’s businesses are different and decisions to build or buy new gear can affect expenditures, as can massive new headquarters. But here goes: In its fiscal third quarter earnings announced on Thursday, Microsoft claims it spent $930 million. Facebook, Apple and Amazon have not yet released their latest earnings, although both Apple and Amazon spent more than $2 billion on “property and equipment” in the previous quarter. Facebook spent $198 million and another $89 million leasing property and equipment.

This quarter’s $1.2 billion also represents a nearly 2x increase over last year’s first quarter infrastructure spending for Google.

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At Scalr, we’ve been happy customers of Amazon’s infrastructure service, EC2, since 2007. In fact, we’ve built our tools for EC2 because we saw an opportunity to leverage its flexibility to help AWS customers easily design and manage resilient services. But as competitors spring up, we always test them to see how they compare, especially in regards to io performance.

On a warm June day in San Francisco, the Scalr team attended Google I/O 2012. Google was rumored to be launching a EC2 competitor, which we were interested in for our multi-cloud management software. It launched. And boy did it sound good. You see, EC2 and GCE offer pretty much the same core service, but Amazon has been plagued by poor network and disk performance, so Google’s promise to offer both higher and more consistent performance struck a real chord.

Not ones to be fooled by marketing-driven, hyped-up software, we applied for early access and were let in so we could start testing it ourselves. Once we got in, we felt like kids in a candy store. Google Compute Engine is not just fast. It’s Google fast. In fact, it’s a class of fast that enables new service architectures entirely. Here are the results from our tests, along with explanations of how GCE and EC2 differ, as well as comments and use cases.

A note about our data: The benchmarks run to collect the data presented here were taken twice a day, over four days, then averaged. When a high variance was observed, we took note of it and present it here as intervals for which 80 percent of observed data points fall into.

API

First off, GCE’s API is beautifully simple, explicit and easy to work with. Just take a look at it. Their firewalls are called “firewalls,” vlans are “networks,” and kernels are “kernels” (AKIs, anyone?). Anyone familiar with Unix will feel right at home.

Fast boot

Second, VMs are deployed and started with impressive speed (and we’ve extensively used 10 clouds). It routinely takes less than 30 seconds to login as root after making the insert call to launch a VM. As a reference point, this is the amount of time it takes AWS to get to the running state, after which you still need to wait for the OS to boot, for a total of 120 seconds on a good day, and 300 on a bad one (data points taken from us-east-1).

Boot times are measured in seconds.

We don’t know what sort of sorcery Google does here, but they clearly demonstrate engineering prowess. That’s 4-10x faster.

Volumes

Those of you familiar with Amazon’s EBS volumes know that you can attach and detach volumes to any instance, anytime. On GCE, you can’t (at least not yet). This precludes you from switching drives to minimize downtime: attaching a volume on a running server allows you to skip the boot and configure stages of bringing a new node up, which is useful when promoting an existing mysql slave to master and you just need to swap out storage devices.

While GCE’s “disks” (as they call them) have that one disadvantage, they offer some unique advantages over Amazon volumes. For example, disks can be mounted read-only on multiple instances, which makes for more convenient fileserving than object stores, especially for software such as WordPress (see disclosure) or Drupal that expect a local filesystem. Disks are really fast too, and don’t seem to have the variable performance that plagued EBS before the introduction of Provisioned IOPS. See for yourself in the following benchmarks.

As you can see, GCE and EC2 are equivalent on reads, but GCE is 2-4x faster on writes.

Read/write speeds are measured in MB/s. Higher numbers mean faster throughput.

Network

A short note about multi-cloud. I’m talking here about services that span multiple clouds, such as replicating a database from us-east-1 to us-west-1, for disaster recovery or latency-lowering purposes, not the multi-cloud management capabilities widely used in the enterprise. I believe that first kind of multi-cloud is a myth driven by the industry’s less tech-savvy folks. I’ve seen too many people attempt it unsuccessfully to recommend it: what usually happens is the slave database falls behind on the master, with an ever-increasing inconsistency window, because the load on the master exceeds the meager bandwidth available between master and slave. Our friends at Continuent are doing great work with Tungsten to accelerate that, but still.

Google’s network is so fast, however, that this kind of multi-cloud might just be possible. To illustrate the difference in speeds, we ran a bandwidth benchmark in which we copied a single, 500 Mb file between two regions. It took 242 seconds on AWS at an average speed of 15 Mbit/s, and 15 seconds on GCE with an average speed of 300Mbit/s. GCE came out 20x faster.

Higher bandwidth is better and means faster up and downlinks.

After being so very much impressed, we made a latency benchmark between the same regions. We got an average of 20ms for GCE and 86ms for AWS. GCE came out 4x faster.

Lower latency is better and means shorter wait times.

This might allow new architectures, and high-load replicated databases might just become possible. Put a slave in different regions of the US (and if/when GCE goes international, why not different regions of the world?) to dramatically speed up SaaS applications for read performance.

Of course, unless Amazon and Google work together to enable Direct Connect, bandwidth from GCE to EC2 will still be slow. I also hear that Amazon is working on creating a private backbone between regions to enable the same use cases, which would be an expected smart move from them.

Multi-region images

We’re not quite sure why AWS doesn’t support this, but images on GCE are multi-region (“multi-zone” in their terms), that is to say when you snapshot an instance into an image, you can immediately launch new instances from that image in any region. This makes disaster recovery that much easier and makes their scheduled region maintenance (which occurs a couple of times a year) less of a problem. On that note, I’d also like to add that it forces people to plan their infrastructure to be multi-region, similar to what AWS did for instance failure by making local disk storage ephemeral.

So should you switch?

AWS offers an extremely comprehensive cloud service, with everything from DNS to database. Google does not. This makes building applications on AWS easier, since you have bigger building blocks. So if you don’t mind locking yourself into a vendor, you’ll be more productive on AWS.

But that said, with Google Compute Engine, AWS has a formidable new competitor in the public cloud space, and we’ll likely be moving some of Scalr’s production workloads from our hybrid aws-rackspace-softlayer setup to it when it leaves beta. There’s a strong technical case for migrating heavy workloads to GCE, and I’ll be grabbing popcorn to eagerly watch as the battle unfolds between the giants.

Sebastian Stadil is the founder of Scalr, a simple, powerful cloud management suite, and SVCCG, the world’s largest cloud computing user group. When not working on cloud, Sebastian enjoys making sushi and playing rugby.

Note: Data scientists from LinkedIn, Continuuity, Quantcast and NASA will talk about their hardware and software stacks at our “guru panel” at Structure:Data next week, March 20-21, in New York City.

Disclosure: Automattic, maker of WordPress.com, is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, GigaOM. Om Malik, founder of GigaOM, is also a venture partner at True.

Update: This story was updated at 7:34 a.m. PDT on May 15, 2013 to note that Scalr is working on a new set of benchmarks and will publish those results soon.

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Last month, Cisco Systems scooped up Israeli self-optimizing network outfit Intucell, one of Bessemer’s key portfolio companies. The networking giant paid $475 million for the company just two years after Intucell raised its $6 million Series A round. But that wasn’t a fluke investment. Bessemer has made mobile infrastructure a significant pillar in its investment strategy.

While Bessemer is perhaps best known for its investments in LinkedIn and Skype, its most spectacular exit in the mobile networking space was Flarion Technologies, a pioneer of the orthogonal frequency division multiplexing access (OFDMA) technology that is now at the heart of all 4G networks. In 2006, Qualcomm bought Flarion for $600 million.

Its current portfolio includes mobile data traffic shaper Vasona Networks, 4G chipmaker Altair Semiconductor and network API developer Twilio, but after the exits of Intucell last month and Traffix Systems last year (bought by F5 Networks), Bessemer is looking to reload. One of the places Bessemer hopes to find to find its next wireless darling is at the world’s largest mobile trade show, Mobile World Congress.

Next week in Barcelona, Bessemer’s lead wireless partner Bob Goodman is wading into a miasma of LTE-Advanced, HetNet, diameter signaling, envelope tracking and self-optimized networking. Before the show, I had a chanced to talk to Goodman about what exactly he’s looking for at MWC and about Bessemer’s wireless strategy in general.

Wireless has been tough on the investor

Investment in telecom infrastructure startups has plummeted in recent years even as investment in services and applications has recovered since the last recession, according to Ovum. In the 12 months ending in June, new money going into networking companies was just $270 million, compared to $796 million two years before.

There’s a reason VCs are reluctant to invest in telecom, Goodman said: It’s such a stratified market. While there are hundreds of carriers around the world they tend to buy their equipment from just a handful of vendors such as Ericsson, Nokia Siemens Networks, Alcatel-Lucent, Huawei and Cisco. Small players have traditionally found it extremely difficult to get on a carrier’s radar unless you had a big vendor at your side.

After Flarion’s sale in 2005, Bessemer stopped investing in wireless players for several years. Not only were the economics difficult for small companies, but the mobile industry seemed to be going nowhere. 3G networks went up, but they were primarily used for voice. The mobile data revolution we had been promised simply didn’t happen.

But a few years ago, Bessemer jumped back into the infrastructure space. According to Goodman, several trends converged to make the market much more attractive. First, there was the iPhone, which reinvigorated the smartphone and drove a deluge of mobile data traffic over carriers’ networks. Operators were looking not only for technologies to add capacity to those networks, but also technologies to manage and optimize that traffic flow.

While data usage was exploding, the big infrastructure incumbents were fighting a massive price war over international borders. “Huawei and ZTE drove costs down, which led the vendors to chop their investment in R&D,” Goodman explained. So just as carriers needed new innovation, their suppliers weren’t in a position to deliver it.

Finally and most recently, the old carrier-vendor ties began to break down. “The carriers have changed their tune,” Goodman said. “They used to want as few vendors as possible, but now that those vendors are all suffering, they have started looking beyond them.”

Intucell is a good example of how startups are taking advantage of that trend. Goodman and fellow Bessemer wireless specialist Adam Fisher introduced Intucell — then an eight-employee company — to AT&T in 2011. After working with the company’s technology for nine months, first in AT&T’s new Innovation Lab in Israel and then in live trials over AT&T’s 3G networks, Ma Bell committed to a system-wide deployment across its 3G and 4G footprints.

Goodman is convinced that much of the new innovation in mobile is going to be done by small startups in places like Tel Aviv and London, not in the big vendor labs in Stockholm or Helsinki. And now that carriers are willing to work directly with startups — AT&T, Verizon Wireless and Sprint have all opened innovation labs for just that purpose — there’s even more incentive for entrepreneurs to attack the mobile networking market.

What Bessemer is looking for in a startup

If anyone understands the dynamic between carriers and small infrastructure players, it’s Goodman; he’s played for both sides. Before joining Bessemer in 1998, Goodman founded Celcore, a distributed cellular networking company that was bought by Alcatel, and Boatphone, a mobile operator out of the Caribbean. That gives Goodman a perspective on what to look for among the thousands of companies and entrepreneurs converging next week in Barcelona.

I asked Goodman what criteria he was using to evaluate the companies he meets. (As you might expect, he wouldn’t reveal who he plans to talk to.) He boiled his approach down to three things:

• Software: While Goodman isn’t ruling out hardware companies, he still favors companies that write code versus companies that build boxes.
• No straw men: Goodman is looking for a company that has identified a very specific problem carriers face and has developed a very specific solution to address it.
• Speed to market: The telecom industry has tirelessly long development cycles with some technologies taking nearly a decade to make their way through the standards process and into commercial networks. Goodman wants technology that carriers could feasibly deploy as soon as it is developed.

“We want to find a carrier problem — an immediate problem — that a really talented group of people can identify and can solve relatively quickly,” he said. “We also want to be able to go directly to the carrier. You don’t want someone else standing between you and the customer.”

There’s evidence that Goodman is willing to bend some of those rules, though. You could argue Goodman’s most successful investment venture broke all of the rules. Flarion built a base station box, which ultimately didn’t sell because it emerged at a time when mobile data use was insipid. Ultimately its OFDMA technology wound up in Qualcomm’s LTE architecture, but only after a long process of standardization.

There are always going to be exceptions if a company is building something exceptional, Goodman said: “I would never rule anything out completely.”

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As OpenNebula director Ignacio Llorente explained to me today, the problem was this: when commercial customers request a feature, it gets prioritized but there’s no firm timescale. Corporate users who need a specific feature developed ASAP could do so themselves and contribute the feature back to the open-source project or, if they lack the time and expertise, they could pay C12G Development Services to develop it, in which case it wouldn’t be fed back to the community and they’d get no glory for it.

That’s where the new scheme comes in. From OpenNebula’s blog post:

“The Fund a Feature Program can be used to implement within a given time frame new functionality or enhancements in the code, new or enhanced drivers, or new integrations with existing management, billing and other [operations, administration, maintenance, and provisioning] systems. The development of new features occurs in the public repository of OpenNebula, and the new code undergoes the testing, continuous integration, and [quality assurance] processes of OpenNebula before its incorporation into the main OpenNebula distribution.”

Llorente also pointed out that the new program will allow corporations to “fund a feature as a way to show their support and commitment to the project, and to bring back the value that they get with OpenNebula”.

This is potentially a neat option for corporate users such as BlackBerry and China Mobile, but how does it fit in with OpenNebula’s super-open ethos? According to Llorente, there’s no conflict, and the move only highlights the difference between OpenNebula and rivals (OpenStack, cough cough) where vendors control the roadmap and may not open-source all features as their own distributions have proprietary components.

“I think it is in the spirit of open source,” he told me. “We are not changing our way to prioritize the roadmap. We have resources that we use to enhance OpenNebula according to the needs of our users, this will not change either.

“In some cases this new funding will speed up the development of the short-term roadmap, in other cases this new funding will accelerate the features that were planned in the longer-term roadmap. But in any case the OpenNebula community will completely benefit from these developments.”

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Intucell has developed a very impressive self-optimizing network (SON) architecture, which turns the typically static cellular network into a dynamic system of constantly expanding and shrinking cells that can follow customers as they move between them. It uses distributed network intelligence to track the network’s health and the congestion level of each cell. SON then adjusts the transmission power of each cell, creating the best configuration for both coverage and capacity. Quite literally cell towers start following you.

In the near term, SON’s self-aware, self-configuring technology could produce networks that consistently deliver faster speeds and drop fewer calls. But in the long term, SON techniques like Intucell’s will become foundational technologies for the future heterogeneous network. We’ve been following the Israeli closely for the last two years and we included Intucell in our 2012 Mobile 15 list of most innovative companies in the wireless industry.

Intucell already has a few wins to its name, but none as important as Ma Bell herself. Back in February AT&T said it would implement Intucell’s SON technology throughout its 3G and 4G networks, which surely attracted Cisco’s attention. Bessemer Venture Partners, which took a big bet on Intucell by funding its entire $6 million Series A round, obviously wins big on the deal. Bessemer, a veteran of many telecom startups, ultimately introduced Intucell to many carrier prospects, including AT&T.

On the closing of the deal in the third quarter, Intucell will become part of Cisco’s Service Provider Mobility Group, joining other Cisco blockbuster acquisitions such as Starent Networks.

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It’s difficult to say where, exactly, all that investment went, but the record spending probably shouldn’t come as a surprise given the current state of the web economy. Much more than just a search engine, Google now finds itself competing against (or has put itself in a position to compete against) formidable foes in a variety of different areas. Doing battle against companies such as Apple, Facebook, Yelp, Amazon Web Services and (with the advent of Google Fiber) internet service providers — and doing it well — costs a lot.

This chart shows Google’s infrastructure spending over the past few years, starting in the third quarter of 2009, which was the company’s most-frugal quarter in recent history and was then the fifth consecutive quarter of reduced spending.

As we’ve explained before, it requires a lot of investment in servers, data centers and other gear (GigaOM Pro subscription req’d) in order to deliver quality web and mobile services. For a company like Google, that means having data centers spread throughout the world to meet demand in different geographies, as well as building special servers and facilities designed specifically to meet the company’s unique workloads. Products matter, but so does the user experience, and every second users spend waiting for a page to load or a spreadsheet to update means a greater chance they’ll just go elsewhere.

Especially in its battle against Facebook, Google can’t afford to get caught slipping. The social network leader is regularly rolling out new services and storing many petabytes of user data. It’s also spending like a drunken sailor on infrastructure, investing more than a billion in infrastructure itself through the third quarter of 2012. That’s a lot less than Google, granted, but it’s nearly a third of Facebook’s total revenue during the same period.

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This is how I have broken them down, and where I think things are heading based on my talks with vendors and customers in all of these industries, but I hope to hear from others who may have different opinions. Let’s get to it.

Enterprise: This is the traditional IT system, comprised of what might be a mix of conventional servers that may or may not be virtualized. This is the world where people buy HP(shpq), Dell( s dell) or IBM servers, specialized data warehousing solutions and oodles of Cisco and Juniper networking gear. These companies probably also have a few specialty Sun or Power PC machines supporting older applications that they don’t want to touch.

Their legacy applications depend on this stuff and they have a lot of legacy applications! This is an area where there’s plenty of money to be made, but it’s not where the growth in infrastructure spending will come from. For startups, especially those commercializing open source technology that’s interesting to the enterprise, this is a market that many overlook at first, and only later find themselves getting called into it with requests for proposals on Hadoop distributions or software-defined network help. The companies will buy some SaaS offerings and maybe a few test infrastructure-as-a-service efforts for non-crucial apps, but aren’t leaving their old infrastructure behind. They also don’t want to mess with tinkering, so issues like openness aren’t as essential as ease of deployment and management.

Webscale: Companies such as Google, Facebook, Yahoo, sections of Microsoft and other large online properties fit in this category. For these companies, IT isn’t just a cost of doing business, it’s the enabler for their business, much like a kitchen is for a restaurant. So just how Taco Bell tries to streamline a few ingredients into many cheap menu options in order to keep costs low, these companies streamline their hardware into a few highly optimized pools of computing for what will likely become several services offered on their platform.

These companies buy servers by the rack, and have the engineering resources to write code and implement new technologies that can save them money or speed up their ability to deliver services. Issues like interoperability and openness are important to them because they want their pieces to be as modular and as programmable as possible so they can tweak it to their needs. While their numbers may be few, they are a huge and growing segment of the market.

Cloud: I divide cloud into two categories. The more modern clouds, such as Microsoft Azure or Amazon’s Web Services that look more like the webscale architectures, and telco and service provider clouds that oftentimes have more of the enterprise gear (or specially built gear from enterprise vendors for the cloud.) An example of such gear would be Cisco’s Unified Computing System. In general the clouds following the webscale model may have some equipment closer to the data-specific or HPC (high-performance computing) clouds, but are content to put the engineering effort into making their clouds work optimally themselves. They will also have similar cost imperatives, continually worrying about how to continue scaling out without driving up costs.

As for the telco clouds and hosting companies that are getting into cloud environments, the industry seems to be in a state of flux, as the providers of such clouds realize that their first efforts were often times built around replicating enterprise environments and trying to force them to scale. Some, like Rackspace, have taken a different tack, throwing their hats in with Open Compute and the webscale guys while others have tried to use their existing gear (and the expertise of outside engineers) with cloud optimized software such as Open Stack or the products from Joyent or Eucalyptus.

HPC and Data: This is the area where I’m having the most trouble, in part because data analytics is so new. I lumped them together in the last few years mostly because both styles of computing are able to take advantage of massively parallel compute architectures and require fast interconnects. But there are differences, especially as low-power ARM-based chips tied together with fabrics enter the equation. Those smaller chips can be more energy-efficient for processing data, because many of the problems associated with data can be broken up into really small bits whereas in high performance computing powerful cores are still the norm — they might be massively parallel and distributed, but these are some of the brawniest cores out there. I think as we continue in 2013, we’ll see these categories split.

I’m also curious how many categories we will have in the next three years or so and what pieces each style of computing will borrow from another. As I said before, this is my mental map of computing influenced by the need for performance, cost and fast interconnects combined with the people on the ground at the buyer and their willingness to tinker. I’d love to hear from y’all about your take on these categories and where they might be headed.

Finch image courtesy of Flickr user Keith Ellwood.

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After seeking damages and an injunction in Texas federal court, Ericsson is now going the regulatory route with a request to ban pretty much any piece of hardware Samsung sells in the United States. Ericsson’s complaint targets “wireless communication devices, tablet computers, media players, and televisions” and lists products like the Samsung Captivate Glide smartphone and the Galaxy tablet.

As we noted last week, Ericsson is challenging Samsung on radio technology, which spans the entire mobile industry from the lowliest handset to the most powerful cell-site base transceiver station. Though Ericsson is no longer in the handset business, it was one of the key contributors to every generation of handset technology from analog to LTE. It now seems to be using its patent portfolio to hit Samsung where it hurts: device sales.

But Samsung has seen a lot of recent success in its infrastructure business. It’s building Sprint’s LTE network right alongside Ericsson.

If this dispute follows the course of other patent blow-outs between industry titans, Samsung is likely to file a countersuit in court and at the ITC. Big companies like Samsung and Ericsson typically possess hundreds of thousands of patents and use them as strategic weapons against competitors. Typically, the disputes are resolved by cross-licensing or in court but, in recent years, the ITC has become a popular secondary venue because of its power to ban imports and because the body often issues decisions faster than courts.

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Despite crappy economic conditions, the mobile equipment market – which IHS defines as not just consumer handsets and tablets but also cellular network equipment – is growing 13 percent this year and will experience an 18 percent spurt in 2014, growing to $444 billion, the firm projects. IHS chalks up the coming boom to mobile broadband, particularly the growing adoption of LTE technologies.

The LTE infrastructure market is still quite small, accounting this year for only $8 billion and a mere $4 billion in 2011. But the LTE ecosystem has a long tail. Device revenues are increasing due to the growing number of smartphone and tablet sales., which take advantage of 4G’s increased bandwidth. What’s more those same mobile broadband trends are increasing wireless semiconductor sales, increasing demand for more powerful applications processor, more advanced radio silicon and a bevy of different device sensors.

Featured image courtesy of Shutterstock user Reno Martin

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The question regarding how to build it has become increasingly important as Internet communications begin to supplant 20th Century methods of delivering voice and video, but it remains unanswered. When we developed the National Broadband Plan, we expressed our concern that the current social contracts governing communications would not create a critical mass of communities with world-leading bandwidth, without which the United States might lose its international leadership in developing the next generation of broadband applications.

The Google experiment.

Google, to its credit, stepped up and offered to build such a network, and a whopping 1,100 communities volunteered to host it. Google chose Kansas City and negotiated a deal in which the governments in that area agreed to numerous actions to improve the economics of the new deployment. Now, the search giant is building out a network that will provide Kansas City a strategic bandwidth advantage and giving its residents new options, involving both speed and price, which they did not have before.

To its credit, Time-Warner Cable, one of the two incumbent providers in Kansas City, responded in the marketplace, offering consumers higher speeds and ramping up its local staff. But now Time-Warner Cable and AT&T, the other incumbent, are responding with lawyers, petitioning the city to receive the same benefits accorded Google. This response could signal a start of a race to the bandwidth top. Or it might be the beginning a race to the bottom. So this is where things get interesting.

Get better or get out of the way.

While it is understandable that incumbent providers have not embraced the opportunity to create test-beds for world-leading connectivity, their reluctance should not slow down others who are willing to take that leap.

The only way American consumers are going to get the same level of connectivity that residents of Korea, Japan, Stockholm and other places around the world already enjoy is if we pursue local experimentation of next generation deployment solutions like Google has done in Kansas City, and others are beginning to test.

Just this week, for example, the State of Illinois, the University of Chicago, and Gigabit Squared, a private company, announced a multi-million-dollar partnership to bring new levels of connectivity to a number of Chicago communities. If our country wants to lead in the 21st Century Information economy, this is exactly the kind of effort we need to encourage.

While state and local law will control the exact response to the incumbents, Time-Warner and AT&T are, and remain, beneficiaries of arrangements that provided them preferred access to public property. Google wasn’t the first private communications company getting deals from the government. Those legacy arrangements enjoyed by incumbents like AT&T and Time Warner granted them monopolies in their respective markets, something Google will not receive.

How governments respond to the incumbents shapes the future

The current situation provides an opportunity to consider what response would actually best improve options for broadband consumers, using Kansas City as the test-bed. For example, one response would be to offer the incumbents the same deal but require the same obligations that they required from Google, such as higher speeds and free connections to public institutions. I suspect the incumbents would not agree to those terms but if they did, Kansas City would enjoy the benefits of the most competitive broadband market in the world.

There is no more monopoly advantage.

Another potential response would be to provide Time-Warner and AT&T what they want without requiring anything in return. This would create a precedent that raises the cost for other communities trying to catalyze an upgrade, and thus discourages local efforts to build the kind of networks that FCC Chairman Julius Genachowski recently underscored that our country needs to be competitive. Even worse, providing such benefits without requiring any reciprocal obligations could put pressure on other communities to engage in a race to the bottom, in which local communities lose traditional benefits without gaining any better options.

It takes two to tango

The Google/Kansas City agreement only happened because the city believed the existing arrangements were not providing what it needed. In fairness to the incumbents, however, we have to recognize that the move to an all-IP world requires all levels of government to reconsider existing arrangements.

As we reconsider those arrangements, we should acknowledge that the current arithmetic of deployment does not justify an upgrade. The math, however, runs both ways. Today, private investments in a next generation network without Kansas City-like agreements are unlikely, but it’s unrealistic and unfair to ask communities to offer such terms unless a private party is willing to make a Google-like investment. We need two to tango in order to drive the next generation of upgrades.

And therein lies the opportunity. The best outcome for the country would be if Time-Warner, AT&T and others seized this moment to offer to deploy the kind of network Google deployed in other communities if those communities would provide the kind of inducements Kansas City offered. If they did so, they would find willing partners. And those partnerships would spark a race to the top that would catalyze new investments, new economic growth, and a new generation of American leadership in delivering the benefits of broadband.

Blair Levin became a communications & sciety fellow with the Aspen Institute after serving as Executive Director of the National Broadband Planning effort. He is currently Executive Director of Gig.U, a project within the Institute that seeks to accelerate the deployment of next generation networks and services by using university communities as test-beds.

Chicago image courtesy of Flickr user Bert Kaufmann

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