Tue January 14, 2014
How Seattle's Bid For Faster, Cheaper Internet Fell Apart
Network engineer Lee Kirk was working for Comcast when a friend of his tried to hire him away to Gigabit Squared Seattle for a partnership between the company and the city to improve Internet service in the area.
But Kirk said an offer never materialized, and his friend at Gigabit – which designs and builds networks – started having difficulties.
“After a couple of months he confided that he was not being paid any longer,” Kirk said. “And then, shortly after that, he confided that he had gone to fill a prescription and his health insurance had been canceled. So I sort of saw the company crumbling from the outside.”
The deal had collapsed, leaving unpaid bills and no clear path forward on a mayoral promise to expand broadband in the city.
An Uneasy Partnership
In December 2012, officials from Seattle, the University of Washington and Gigabit, then a new company, announced a plan to bring high-speed Internet to certain Seattle neighborhoods.
Gigabit Squared would lease the city’s fiber optic network and raise the money necessary to connect to nearby homes and businesses. It fulfilled, at least in a limited way, a campaign promise of Mayor Mike McGinn to expand broadband citywide.
On a visit to Seattle last June, Gigabit Squared’s then-President Mark Ansboury was upbeat. Strolling around Seattle’s University District, he pointed to buildings where residents could look forward to blazing fast Internet service once he found enough investors.
“We committed $20 million dollars to build out the initial framework. But we’re raising more capital than that,” Ansboury said.
Success on the Gigabit Squared project would have meant more competition to Comcast and CenturyLink. Its cheapest package gave customers free Internet for five years after an initial $350 installation fee. Gigabit Squared also planned to extend service to residents of public housing.
But the company didn’t have a track record. Bill Schrier, Seattle’s former chief technology officer, retired before the partnership was announced. He said he was cautiously optimistic, but said, “My major concern was that Gigabit Squared had never really done anything.”
The Project Crumbles
A year later, the partnership was in trouble.
The company owes Seattle about $50,000 and may have other debts.
Schrier said the economic development potential of faster Internet service is enormous, and city officials deserve credit for trying to bring it about.
He said there are two ways for Seattle to pursue high-speed Internet services: One is to try and attract another company with a proven history, like Google Fiber, which has built fiber to people’s homes in Kansas City and Austin. The city could also create a public utility to build it, perhaps relying on property taxes.
‘A Clean Slate’
Recently inaugurated Mayor Ed Murray said the city can work off a clean slate. “We obviously have to go back to the drawing board and figure out how we get Seattle – the center of one of the high-tech cities on the planet – wired,” Murray said.
While residents of some neighborhoods have ongoing problems with Internet service, it’s not clear that most people in Seattle are clamoring for more options. But for a certain contingent of tech-savvy residents living in the city’s condo and apartment buildings, broadband is vital.
That’s the target market for CondoInternet, which offers service at one gigabit-per-second, the kind of speed that universities and tech companies want for their offices.
CondoInternet is already expanding in Ballard and Fremont. The firm’s founder, John van Oppen, said expanding would mean digging up streets – it's incredibly expensive. Last year his company was acquired by Wave Broadband, which has the money and infrastructure to let them grow more quickly.
“It’s not cheap to build fiber to a business or to a home. And this requires kind of bigger-company scale. This is why we partnered with Wave,” van Oppen said. “As a smaller company we couldn’t expand at the rate we wanted to on our own, because we couldn’t fund it.”
Van Oppen isn’t shocked that Gigabit Squared couldn’t fulfill its promises. Seattle’s current chief technology officer, Erin DeVoto, said Seattle gave the project “the college try,” and learned the lesson that “it still comes down to financing.”
DeVoto is waiting to see what Murray has in mind. But she said that new statistics show more people are using mobile devices and Wi-Fi to access city services. So the city might focus on making those services as user-friendly as possible, rather than helping extend fiber to homes and businesses.