I'd buy that for a dollar!
Sounds like a win-win situation for everyone. Any chance we could sell BT to Google and get gigabit in the UK as well?
Choosing the small city of Provo, Utah as the next location to receive Google's high-speed fiber internet service must have been a no-brainer, as the online giant will reportedly pay just $1 to set up shop in the area. That's in part because, unlike Kansas City and Austin, Texas before it, Google won't actually need to build …
Huh? Unless you can prove that Google manipulated the bond process years ago to set this purchase up now, or that they acted illicitly to secure the deal now, it's hard to see what's unfair about the business buying a money-losing project. The public should be concerned about how the project got funded in the first place and whether the city's forecasts for breaking even or making money had any basis in reality. They should avail themselves of the opportunity to make sure Provo did its due diligence in the sale as well.
Regarding private companies making profit off of the public teat, you might be appalled to learn how basically every professional athletic team in the US builds a stadium. They claim that they can't be "competitive" with their inferior facilities and extort taxpayer funds under threat of relocation. The NFL, a tax-exempt organization, made ~$1 Billion in profit in 2012 while playing every game in stadiums at least partially financed by the taxpayers.
I think more serious questions need to be asked of the administration that screwed up the original 'business'. Google is a business, they don't owe any obligation to the town to make it any easier on them with the terms, they are out for the best contract they can get. The deal isn't entirely one sided in that it is better than supporting the continued losses (just the original bonds need supporting) and theres no need to pay for completing the rollout or upgrading the original infrastructure, nor will people have to pay a large install fee which should boost signups. That's leaving aside any potential fringe benefits such as making the place a little more attractive for people coming to live?
I'm not saying it doesn't suck that the tax payers are being left with the shitty end of the stick, but they need to be looking at the administration that screwed this up not the company that is always going to look to get the best deal for itself. Of course they will get away without any repercussions and take a nice amount of money with them, this is the way with politics, no culpability, no morals.
A car metaphor. Sigh.
What kind of car is it? Does it have any outstanding HP payments? What model is it? Is it more like a Microsoft or Apple car thing? What if someone hides in the boot (trunk) when you go to the supermarket?. Should that be a crime? What relative value should be put on beautiful versus functional cars? Do people have the right to use a car if they don't know how one works? If someone takes your car, are you entitled to steal it back?
Did I miss any out?
"It is unfair (And probably very illegal) for a Private company to make a profit when the public paid for almost all of it." What rock have you been living under for the past few decades?
As stated in the article, the whole sorry business was conceived as a public-private partnership, much like a lot of stuff in the UK. That means that the private companies buy up the local/state/national government puppets in charge, who then sell the idea (of handing control over to the private profit making sector) to the proletariat by promising a loving reach-around (hospital ward, school building, whatever).
It is later on, when bent over grabbing their ankles and hemorrhaging copious blood/funds, that people begin to realise that they are being rampantly fucked and that they should have kept control of the situation all along. Too late! Contracts signed, government balance sheet turds polished, politricksters long gone, private sector trollolololing all the way to the tax haven, next generation drowning in public debt, shit creek rapids approaching, paddle AWOL.
You mean much like AT&T gets to profit as a private company that was started with all government money, broken up as a monopoly (with some of the smaller companies this resulted in getting government subsidies), then rebuying it's divested businesses back up for a lot less than they are worth?
Pretty much business as usual in the good ole usa.
Depends on the consumer, yeah I'd agree for someone who doesn't use it much, who maybe just wants to watch a single stream then 5mbit/sec will be fine... but some folks might have families with multiple devices who want to do different things on the net (in my case I'm a single dad with two nearly teenage daughters... they enjoy the benefits of being able to stream two Netflix streams at once while their little sister hogs the big telly to watch something else on Lovefilm). Still I guess those who feel the need for a 1Gbit service can pay the extra if they want.
As another poster said, why can't Google buy BT :-)
(I wonder if this will be a bit like the situation in the UK with cable in the 90s, lots of little companies running fibre and then Google coming along and buying all the companies up).
As one of the last modemers on the planet, I'm currently paying $20 USD/ month for dialup, 56Kbps, and wouldn't mind if this deal came to my town.
Although the thought occurs that if they become the Walmart of bandwidth they could run any other remaining providers off the rails and create a monopoly, huh (not Cox or Comcast, but any remaining small ISPs). Hmmm.
Do any armchair lawyers know why the $1 payment? I've seen similar things in other US legal situations - the Boy Scouts renting public land and various public buildings for $1/yr to use as regional headquarters, for example. Why this curious small payment.
I've always assumed there's a law somewhere that forbids the government from simply handing over public assets to private owners and the $1 token fee is just a sneaky way around it, but that seems far too simple an explanation - even congress would hesitate to write a law quite so trivial to circumvent.
A lot of stuff does get transferred for a consideration, but usually the liabilities go with it. Unencumberred transfer is rare.
Having said that, the city has just reduced its ongoing liabilities by 8 mill/year (the losses), plus had an undertaking for network completion, PLUS has dodged having to pay to upgrade infrastructure (easily another 40 mill)
Yes, there's a 3million/year odd bond repayment to deal with, but if they shut down the network tomorrow they'd still have to pay that anyway - and the way things are worded, if google walks out everything reverts back to the city - including any work Google adds to the network.
I have every confidence Google will do what it says. Had the city sold to one of the USA cablecos it's quite likely they'd have demanded a legislated local monpoly, plus money up front AND halted any further work for 20 years, as well as driving up costs substantially for endusers.
This is not a case of leveraging monopolies. The alteratives for the city were much, much worse.
A bit erroneous...
It's not $8m/year, but $8m total losses in 2008 (calculated by "a libertarian think tank", so probably overestimated - but let's not start on it).
Here is the link to their study : http://reason.org/files/0ed1e38947a206981804b66dfd19b9f7.pdf
You will notice that they count both "Net operating and nonoperating expenses".
According to the first definition found in google (I like irony) : "Non-operating expenses may take a variety of forms. The most common type relate to interest charges or other costs of borrowing."
Soooo... Bond repayment included. The one the city will still have to repay.
If the losses minus the cost of the bonds are less than the operating profits, then this is not that a good deal for Provo as :
- They'll still have to repay the bond.
- They lose the asset unless Google bail out.
- Google won't have the burden of debt, will get profits from the start without even doing anything.
- Google won't bail out. Provo won't get the network back.
- Provo won't get some operating profits to offset the bond repayment.
- Citizens of provo will be even more burdened by taxes than if the city kept the network...
If operating losses are greater than the operating profit, then getting rid of the thing was indeed the right move.
Yes, I heard about the sunken cost fallacy, thank you. I also heard about agendas and the art of manipulation...
(DISCLAIMER : Building such a network in the first place was a f***'up. Everyone can agree with it. I wonder where the gravy went...)
Given that the loss was increasing not decreasing, the city needed to bail. They've gone from -$1.4M/year to -$2M/year with no signs of stopping let alone reversing the decline. Harrisburg, PA pulled that kind of crap year after year for 18 years on a trash incinerator plus other even more ridiculous costs trying to become a "museum tourist destination.*" Only a million or two here and a million or two there, but last year they were suing to try to declare bankruptcy (PA commonwealth law prohibits the specific path they wanted to take). So I'll at least credit Provo with having the wherewithal to stop the losses.
*yes if you are British have a good belly laugh about that one. I can't and for pretty much the same reason you can. The thought of a berg on this side of the pond that wouldn't even measure up to say Liverpool hoping to become an international museum tourist attraction... There really is nothing to say beyond that.
With so many people coming to depend on Google as it slowly seeps out of the digital world and right into the physical world (Android phones/tablets, Google Glass and whatever else they'll make next), will we eventually (centuries down the line) have a global vote to change our little blue marble's name to Planet Google or wil they just announce it one day...
They should pay for it, and they should determine how it's operated. The last mile is clearly a municipal task. They are also the ones can can do it most efficiently. They own the land you need to put the fibres. They already dig up that land from time to time. Need to replace some water pipes? Plop in a bunch of fibres while you're at it and it'll cost next to nothing.
Building your own network for 10k people isn't particularly hard. The CCC does this at least once per year for their congresses. You need to know what you are doing, and you need to be able to splice fibre.
An interesting idea, but this being in the US there's an issue you overlooked: Ownership by 'the people' really means operation by the government, which means a very politicised internet. Most US states already have laws that forbid tax funding to libraries unless they install pornography filters on their network - it's a near-certainty that some (R-suffixed) lawmakers would introduce something of similar nature, possibly inspired by the old Comstock laws. Internet service providers are not prohibited from imposing manditory censorship on their networks, but there's long been an informal agreement that they won't (child porn blocks aside), and they have little business incentive to do so. Not so the government, where a good moral scare and crusade is a proven successful route to reelection.
indeed. It seems like many people posting on this thread missed some of the recent history of municipalities attempting to do just this-- Comcast and others came down like a ton of bricks with their lawyers and friends in high places to get it declared anticompetitive.
I'm no Google fan, but pretty much anything that helps break the local cable monopolies in the US is a big step forward. It looks like Provo has put in the right sort of requirements too-- Google have to actually hook up everyone, and high quality basic internet service will be completely affordable. Having the whole project be public run and public owned would be brilliant, but this seems like a reasonably good alternative.
If people were ripped off for $700 just to get the service then I'm not surprised it was making a loss. I wonder what the take-up is, and how much it will bump up when the up-front fee comes down to something more reasonable.
If it really does cost the city that much to connect someone then they've done something wrong.
Only 48% of Utahns are LdS (the exact figure varies based on which poll / survey / study you believe). Provo is considerably more LdS (78%) because of BYU (a private university owned by the LdS Church) and the LdS Church's largest MTC (Missionary Training Center). Provo will also be the second city in the world with two LdS temples, once the burnt-out tabernacle gets converted. Not all LdS supported California's Prop 8. The LdS Church spent less than one million dollars in that campaign - including airfare for General Authorities to visit California. The LdS Church strongly urges members to be involved in politics, but cannot legally endorse any particular candidate or political party. Only 2% of Californians are LdS, so you cannot blame the LdS for the outcome of Prop 8.
iProvo was created about the same time as Utopia. Utopia was to be a state-wide fiber network. The state was to provide and upkeep the infrastructure while private companies were to lease use of the network as ISPs. The city of Provo thought that the business plan of Utopia didn't make sense, so they opted out and created their own network. Utopia and iProvo were expected to provide 100Mbps upload and download speeds on-network with tiered plans for off-network. The last time I checked, only 8 cities have signed up for Utopia.
This is another typical case of free handouts or corporate welfare for a billion-dollar company.
Having said that, Provo has no leverage. If they didn't agree to Google's tough negotiations, they would just to any any of the the other 500 cities begging for Google Fiber.
If Provo mismanaged their city fiber rollout so badly, the citizens should hold them accountable somehow. Chattanooga and others have city fiber networks and seem to be managing it professionally.
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