UPDATED: Who Will Be Google Fiber's Next City of Choice?

Update: We were right, Google Fiber announced today on 03/24/2015 that Google Fiber will be made available in Salt Lake City, Utah. More details to follow. Below are the arguments we previously made about why Google Fiber should look at Salt Lake City next nearly two years ago.

Google Fiber just announced today that they will be moving to a third city by the end of 2013.  In the announcement, they stated that if the deal goes through, they will be acquiring the fiber network infrastructure that made up what used to be iProvo - a municipal fiber internet network that was created for residents in Provo, Utah.

Since I first learned about Google Fiber, I figured it would be a good fit for them to look for under-utilized fiber networks, many of which are municipal networks.  (Which it turns out is basically what they do)  It really came as no surprise to me that Google would pick a network like iProvo, in a city like Provo, Utah, because the fiber is there, the customers are there, but for whatever reason (I chalk it up to municipalities not knowing how to get the word out about the offerings of the service), the amount of subscriber growth never seems to keep up with the costs of operating and expanding the network.

So it made sense to me to think that Google would first be interested in these downtrodden networks, many of which are under fire because the cities that invested in them are not getting the full benefit that was promised when they were proposed and constructed.  Take a desperate former network operator like the City of Provo and match them up with the 1 Gbps offering Google Fiber, and it seems like you have a win-win.

Which may make one of the next "cities" that Google Fiber announces seem a bit different than what we've seen so far.  To this point, the cities announced have not been relatively close.  Kansas City is not near Austin, TX, and Provo, UT is not near either of those.

But the cities of Orem, Murray, West Valley, Midvale, Brigham City, Centerville, Layton, Lindon, Payson and Tremonton, Utah, are all relatively close to Provo.

Am I crazy?  Why would these cities possibly be on the list to be next for Google Fiber, when they are near Provo, and are all suburbs of larger cities such as Salt Lake City?  I think the answer is simple.  It is because of a municipal fiber network that has been struggling for over six years to keep it's subscribers, partner cities, and others in the State of Utah happy.  That network is called UTOPIA, and I have thought for some time that it is a prime candidate for Google to pick up for its expansion of Google Fiber.  For all intents and purposes, UTOPIA and iProvo are almost identical in how they were set up, using similar revenue, subscriber, and provider models.  In fact, both of them use the "wholesale" model, where the network itself provides the venue for multiple providers to offer services.

Yet, like iProvo, UTOPIA has struggled to gain users, even though for much of the six or seven years it has been available in it's partner cities, it has had higher speed offerings at lower cost than the major competitors in the land:  Comcast (Xfinity) and Qwest (CenturyLink).  For a while, I was able to use UTOPIA at home and it was great.  At that time in 2006-2007, I constantly received 40 Mbps download for about $40 per month.  That was back six years ago.  Speeds on Comcast in Salt Lake County have just barely begun to reach 40 Mbps, and the full cost of that internet service is around $60.

I would imagine that every mayor of those 11 partner cities of UTOPIA are talking about the Google Fiber acquisition of iProvo, talking to the mayor of Provo, and wondering if that is the same course of action they should take.  And I wouldn't even be surprised if talks with Google have occurred. (although they say they have not).

Speaking of which, as I searched for some information on UTOPIA's website, I came across a headline in the Salt Lake Tribune that was published today that reads: Executive of troubled UTOPIA sees hope in Google Fiber deal.

While, ultimately, UTOPIA cities may not agree to the terms necessary to complete a sale to Google of the infrastructure, at least for the time being, under the "wholesale" service model, I don't see why Google Fiber couldn't work a deal to at least be a carrier on the network, and sell the 1 Gbps service as well as their other service tiers since the UTOPIA network already has that capability.  Especially since they will already have an office in Provo where they are running iProvo.  Eventually, a buy out or a significant stake in the ownership of the UTOPIA fiber could then be negotiated.

This already fits into Google Fiber's apparent strategy, as they have been buying "dark fiber" for years, and recently leased more fiber in Kansas City.  That municipal network, called LINKCity, has also had similar issues that iProvo has had, and that makes them also somewhat similar to UTOPIA.

In some cases, leasing fiber first, rather than owning it outright, could be a great secondary strategy to bolster their footprint where networks like UTOPIA are already being rolled out, without having to put up their own money upfront.  Some estimate that it would cost Google over $11 Billion of their own cash to roll out their own network nationwide --a cost they can definitely lower if they lease some of their fiber network while awaiting momentum gains to offset costs.

It will also be interesting to see what the big competitors do in the surrounding areas of Provo and in Salt Lake County, with Google Fiber coming to their back door.  Will they scoff and shrug it off, or will they try to beat Google to offering faster speeds in those surrounding cities?  AT&T promised Austin a competing 1 Gbps service following Google Fiber's announcement in that city.  Stay tuned.