NO TEARS FOR THE MONSTER. GOOGLE IS ABOUT TO BEHEAD
By Mike Langberg
Mercury News
Posted on Tue, Oct. 04, 2005
Google has a staggering $7 billion in the bank and is using it to fund some off-the-wall ideas, so maybe the Mountain View company's bid to provide free wireless Internet service throughout San Francisco will be a one-shot deal.
But I see Google as a knight in shining armor, decapitating the two-headed monster of SBC and Comcast that has controlled high-speed Internet access for Bay Area consumers.
The monster is so big that it may keep snarling for a while, but it will never regain all its power.
Broadband, a vital service for personal and business success in the 21st century, is no longer destined to become a quasi-utility provided by a single government agency or private company. Or even a duopoloy, a fancy word for a monopoly formed by two suppliers, such as we have with SBC and Comcast.
Instead, there will be a long line of broadband providers beating each other's brains out to offer the best deal to consumers.
In this happy new world, people on a tight budget or with minimal needs will get free service. Those who want speedier data or more extensive tech support will opt for paid service at a wide range of monthly rates.
Google didn't start the process of change that's already undermining the broadband duopoly, but the Mountain View-based Internet search company is so hot right now that any idea it advocates gets instant global attention.
Look back about a year and you'd see the duopoly in full flower. The dominant phone and cable company in each part of the United States offered broadband in a narrow and expensive range of $30 to $50 a month.
But the duopoly couldn't hide the huge profits from selling broadband at those prices, so competitors started looking at how to get into the game.
One of the most promising alternatives is municipal WiFi wireless networks, or muni wireless for short. WiFi, for the uninitiated, is simply the computer networking equivalent of cordless phones.
There are two parts to a cordless phone: the base station and the handset. The base station is connected to a wired phone line and an AC outlet, while the handset can roam up to several hundred feet.
WiFi base stations are called access points or routers; home access points cost less than $100. Many notebook computers now come with WiFi installed; you can add WiFi to a notebook or desktop computer with adapters costing less than $50.
Muni wireless works in much the same way, using beefed-up access points installed on light poles. By placing access points at a density of 15 to 30 per square mile, the WiFi signal can blanket an entire city. Any WiFi-equipped laptop can pick up the signal outdoors, and most homes can tap the signal indoors through an inexpensive adapter.
Because WiFi equipment is so cheap, it will cost less than $10 million to build a muni wireless network covering all of San Francisco's 49 square miles -- a fraction of the cost of DSL or cable broadband systems.
This allows duopoly rivals to explore new approaches, such as providing service free with advertising support. Low-cost broadband could also encourage more consumers to sign up, and accelerate the growth of new-fangled services such as voice-over-the-Internet phone calls.
Google's offer may not even be the best deal on the table. In response to a request issued in mid-August, San Francisco apparently received more than a dozen offers.
MetroFi of Mountain View, which already runs muni wireless networks in Cupertino and Santa Clara, says it's willing to provide free service in San Francisco at 1 megabit per second -- more than three times faster than Google's free 300-kilobit proposal -- in exchange for putting a small ad window on the screen. People paying $14.95 a month in the first year and $19.95 a month thereafter would escape the ad window and could get tech support from live human beings.
Some early proponents of muni wireless took the misguided view that cities themselves should build and operate these networks.
Philadelphia, most notably, is trying to push forward a complicated plan in which the city would set up a non-profit group to run a muni wireless system. On Monday, Philadelphia accepted a bid from Internet service provider Earthlink for the system, although it's unclear under what terms.
The energetic response from Google, MetroFi and others in San Francisco shows cities only need to step back and open the doors for private businesses to build networks with no risk or expense falling on taxpayers.
There's even the possibility in future of ``overbuilding,'' allowing two or more WiFi networks to split up a city's light poles. Not to mention the emerging competition from cell phone companies offering wireless broadband.
SBC and Comcast will be strongly motivated to squash these threats while they're still in the cradle, explaining in part why both companies have recently come up with teaser rates of $15 to $20 a month for introductory periods ranging up to a year.
But that's only the beginning. SBC and Comcast will have to make big and genuine price cuts to have any chance of retaining their broadband customers. I won't shed a single tear if their profit margins suffer as a result.
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Contact Mike Langberg at mike@langberg.com or (408) 920-5084. Past columns may be read at www.langberg.com.
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