Google Inc. revealed Thursday that it will offer its long-awaited, ultra-fast Internet service in Kansas City for $70 per month, or only 20 percent of the rate charged for a similar service by Chattanooga's EPB.
The new gigabit-per-second Internet service in Kansas City is intended as a showcase for what's technically possible and as a testbed for the development of new ways to use the Internet. Bypassing the local cable and phone companies, Google has spent months and an unknown amount of money pulling its own optical fiber through the two-state Kansas City region.
EPB in Chattanooga beat Google to create the first "Gig City" last year by laying fiber-optic lines throughout Chattanooga and offering the fastest citywide Internet service in America. But EPB charges $350 a month for its gigabit service, which so far has attracted 19 commercial and eight residential customers in Chattanooga, EPB spokeswoman Deborah Dwyer said.
"We're thrilled about the Google announcement," she said. "They are a multibillion dollar company that is willing to invest a significant amount of money to solve a problem, even if it means losing money by offering their products below cost. Unfortunately we don't have a Google-sized pocketbook, so we can't take that kind of financial loss."
After vetting many contenders, Google announced last year that the Kansas City metro area would be the first to get its "Fiber for Communities" broadband service.
Some cities had used gimmicks to get the company's attention. Topeka informally renamed itself "Google, Kansas." A group in Baltimore launched a website that used Google's mapping service to plot the location of more than 1,000 residents and give its reasons for wanting the service. Hundreds of groups on Facebook implored Google to come to their cities.
The $70 monthly fee will pay for "gigabit" Internet service, about 100 times faster than a basic cable modem. For another $50 per month, Google will provide cable-TV-like service over the fiber, too, and a tablet computer that works as a remote.
The channel lineup includes Nickelodeon, Discovery, Bravo, Starz and Showtime (which may require additional fees) but is missing AMC, HBO, CNN, Fox News and ESPN. Google spokeswoman Jenna Wandres wouldn't say why the channels were missing, but said the lineup would expand.
Google said it will only start hooking up households in neighborhoods where a sufficient number of people want service. Kansas City residents have six weeks to register for service, after which Google will decide which areas have enough interest.
Google also will offer a slower Internet option, at a DSL-like 5 megabits per second, with no monthly fee to households that pay a $300 installation fee. The free service is guaranteed for at least seven years, but is available only in neighborhoods where enough people have registered.
The $70 fee is more than what cable or phone companies charge for basic Internet service, but the service also is much faster. "Gigabit" speeds, or 1,000 megabits per second, are generally unavailable from other companies other than Chattanooga's EPB.
Kansas City (Mo.) Mayor Sly James, who attended the news conference Google held in a converted yoga studio in midtown Kansas City, was clearly pleased with the announcement.
"We now have an opportunity to take a giant step, and if we don't it's all on us," James said. "It's going to be a great educational tool ... that's going to create innovators and entrepreneurs, and that's exactly what we want."
There are few ways for consumers to take advantage of gigabit speeds. For everyday activities such as Web surfing, email and video-watching, there will likely be no substantial difference. The higher speeds will help with video sharing and online backups.
In Chattanooga, backers of the gigabit-speed Internet invited Web developers and entrepreneurs to come to the "Gig City" this summer and compete for up to $300,000 in startup capital and prizes for businesses that use Chattanooga's fast Web service.
Google also is hoping that the network it built in Kansas City could help the development of other advanced applications that can take advantage of the high speeds. It's also hoping to spur phone and cable companies into upgrading their own networks.
"Access speeds have simply not kept pace with the phenomenal increases in computing power and storage capacity that's spurred innovation over the last decade," Milo Medin, Google's vice president of Access Services, said in a blog post.
However, it's expensive to pull optical fiber compared with using existing phone and cable lines to provide Internet service.
Verizon Communications Inc. is the only major U.S. telecommunications company to have connected homes directly to fiber. Wall Street analysts say that project, which has cost $23 billion, is not paying off.
Verizon has stopped adding new communities to its network, dubbed FiOS. It charges $70 per month for download speeds of 15 megabits per second, less than 2 percent the speed of Google's gigabit.
Justin Venech, spokesman for Time Warner Cable, which provides service in Kansas City, said Thursday that he watched Google's announcement online and said he didn't see "too many things that jumped out at me beyond the speed."
"Kansas City has been competitive for video and broadband services for a long time," Venech said. "We offer advanced products and services today and we have experienced local employees delivering local services."