Blandin on Broadband

Craig Settles wrote an interesting piece in the Daily Yonder about the Google Network opportunity from a rural perspective. There were a lot of great points that might help rural communities consider their options:

• Google is looking for quick deployment; terrain and low population density usually works against rural areas in terms of quick deployment
• Most rural communities only have so many resources to dedicate to an effort like this and this is a long shot. Perhaps there’s a more realistic approach that deserves attention.
• Google wants a profitable network. For broadband providers commercial accounts are generally more profitable than resident accounts and most rural areas have fewer businesses than urban counterparts. So making the case of profitability is difficult.
• Resident accounts can be costly because they require more customer support. That’s going to be most true in areas where broadband is new and customers are still learning – and for many rural areas, broadband will be new.

I’ve greatly distilled the points – but I think I got the major ones. I agree with much of the observations – especially having worked for an ISP for a couple of years. The article points that that with most providers, a greater customer base doesn’t mean greater profit – nor does local increase in economic development bring profits to the provider:

“It’s extremely difficult for private sector companies to financially benefit from many of broadband’s economic development benefits to communities,” Galen says, “because these do not directly impact companies’ bottom line. Therefore, communities have to spend a lot of time with potential partners working on this puzzle, or else face failure by the private partner in the long run.”

But, and I’m not guaranteeing this, Google is different. Broadband subscriptions are not Google’s only revenue stream. I don’t understand how they make a big chunk of their money – but one example is their adwords. They make money every time someone clicks on a Google ad. An increase in the user base means an increase in clicks. An increase in businesses online means a potential increase in ads sold. A increase in economic development means a potential increase in revenue spent on online ads. And that’s just one segment of their revenue stream. That’s the genius of Google, in my opinion, they have developed entirely new ways to make money.

This might be optimistic of me – and I hardly speak for Google – but I think the fact that Google does benefit from an increase in users will make a difference. I spoke about the flip side of this idea last week – spurred by comments from Chris Mitchell. Google’s bread and butter is not providing connectivity so that may cause other problems – or maybe the diversity will work. It’s part of the gamble.

And speaking of gamble, there’s at least one more Minnesota community who has thrown in the hat for their chance at the Google Fiber network: Shakopee and Scott County are looking into the option.