TMCNet:  Time Warner, AT&T cutting Google-style deals in KC

[October 03, 2012]

Time Warner, AT&T cutting Google-style deals in KC

Oct 03, 2012 (The Kansas City Star - McClatchy-Tribune Information Services via COMTEX) -- Google Inc. came to Kansas City promising breakneck Internet speeds and asking for a way to cut through local red tape and its pesky costs.

Local competitors noted that the California tech titan got some enviable goodies from local government -- promises of office space with electricity paid, expedited construction permits, waived fees and help in marketing what is known as Google Fiber.


Now, as Google is finally set to launch the much-coveted service -- 1,100-plus communities had lobbied for the project -- Time Warner Cable has secured much the same treatment from Kansas City as its new-to-town competition.

"We understood that when we entered the deal with Google," said Rick Usher, Kansas City's assistant city manager. "When we make concessions to one company, then everybody else gets that same benefit." That means City Hall is refunding permit fees it has charged Time Warner since Kansas City cut the deal that landed Google.

By gaining the same footing as Google, the cable company has saved about $27,000 in fees in Kansas City. Google, by comparison, has avoided about $100,000 in permit and other costs. That reflects the difference between ongoing work to an existing system and the building of an entirely new network.

Both companies have direct access to city staff on technical issues. They avoid future permit and excavation fees, get access to rights-of-way and will receive free traffic control during construction.

Google has also been allowed to build what it calls "fiber huts" -- garden shed-sized buildings housing equipment that connect neighborhoods to the Internet. Usher said the city would consider requests from Time Warner or AT&T to get the same free access to mostly unused city land.

The city and Time Warner reached their agreement in August, largely out of public view because it did not require approval by the City Council. Usher said AT&T, the other large provider of Internet and subscription television through its U-verse brand, is in talks now with the city on a similar deal.

Time Warner is also in ongoing negotiations with the Unified Government of Wyandotte County to get Kansas City, Kan., to match the terms it reached with Google.

Time Warner began pushing the two cities for Google-style treatment early this summer when, said company spokesman Michael Pedelty, "we had a better understanding of what the full impact was going to be" of the new Internet seller in the market.

"We wanted to be treated the same," he said. "Any business would." AT&T has been largely muted about the municipal giveaways to Google and how officials in both Kansas Citys have promoted the company's coming service. Still, AT&T is making some noise about what it sees as preferential treatment for the Internet company.

"It's time to modernize our industry's rules and regulations to ensure all companies compete on a level playing field so all consumers benefit from fair and equal competition," AT&T said in an emailed statement.

In a commentary issued by regional AT&T officials this summer, the company said: "We think that what's 'good for the Google' should be 'good for the gander,' and that regulations should be modernized to allow all companies to invest in products and services people want." It can be tricky, however, to compare the various utilities. Time Warner, for instance, has built a network that reaches virtually every neighborhood in both Kansas City and Kansas City, Kan. -- largely because it operated under now defunct franchise agreements that gave it a near monopoly. AT&T's offering can be found scattered across a range of neighborhoods, but it's far from ubiquitous.

Google, meantime, is selling an untested service that promises far greater bandwidth than most retail customers could previously afford. Cities wanted to lure Google Fiber in hopes that affordable mega-broadband could make them hubs for Internet-centered innovation.

Yet Google is building only in neighborhoods where it is convinced demand is strong enough to justify the expense of expanding its network. It plans to light up its first customers in one Kansas City, Kan., neighborhood this month. It will likely be years before it reaches across most of both cities. Even then, its service may not be offered in poorer areas if Google isn't convinced it can land enough customers there.

Google's competitors have also asked for fair treatment in the costs charged to string their wires on utility poles.

Federal Communication Commission rules dictate rates for those power pole connections for cable and telephone operators. Cable companies typically pay more than phone companies -- even though in today's market consumers see both as way to buy telephone, cable and Internet service.

Kansas City Power & Light is treating Google's fiber optic lines as neither telephone (in fact, Google is not selling telephone service) nor cable. Chuck Caisley, a KCP&L spokesman, said the utility priced the Google hanging fees based on the added wear and tear on utility poles. Confidentiality agreements barred him from saying whether the fees were higher or lower than those of its competitors. But he said the rates were calculated to prevent any expense to electrical customers.

In Kansas City, Kan., the Board of Public Utilities offered Google free access to the area on its poles usually reserved for electrical lines. Google ultimately passed on the offer because of the added costs of working so close to dangerous power lines. Instead, it's paying $10 per year per pole, a discounted rate given in return for 50 connections to Google's Internet network for BPU's "smart grid" aimed at increasing energy efficiency.

Time Warner's deal with Kansas City carried over to marketing, just like Google's.

City officials must develop and manage a "marketing/education" program about the local cable system and cooperate with Time Warner "on all publicity and public relations." In return, Time Warner is obligated to keep service in the areas it reaches now, including some free connections and space on its channel lineup for the city.

To reach Scott Canon, call 816-234-4754 or send email to scanon@kcstar.com.

___ (c)2012 The Kansas City Star (Kansas City, Mo.) Visit The Kansas City Star (Kansas City, Mo.) at www.kansascity.com Distributed by MCT Information Services

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