Google Fiber Project: A Product Of The Free Market Or Government Interference?

Google will soon launch Google Fiber service to select residents in Kansas City. Fred Campbell, Director of CEI’s Communications Liberty and Innovation Project, lauded the project after it was announced in late July. Today in Ars Technica, Campbell responds to critics who claim Kansas City’s concessions to Google to attract the project qualify as taxpayer-funded “corporate welfare.”

Campbell writes:

In response to my analysis of Google Fiber, Timothy B. Lee at Ars Technica says the Google Fiber deployment is “hardly an example of the free market in action.” Lee notes that Google received subsidized access to local government resources in the Kansas City area to support its fiber deployment. As I disclosed in my initial analysis, however, I agree that Google’s deployment did not occur in an unfettered free market. Our analyses don’t differ on the publicly available facts surrounding the Google Fiber deployment—they differ on the inferences and policy lessons that can be reasonably drawn from those facts.

Lee infers that local government subsidies were a significant factor in Google’s decision to deploy a fiber network in Kansas City. Though that is possible, there is no publicly available evidence indicating that subsidies were economically necessary for Google’s deployment. In its testimonybefore Congress, Google said it passed over other cities due to stringent regulatory requirements governing infrastructure deployment, not because they refused to offer subsidies. Most cities require network operators to serve all or substantially all neighborhoods irrespective of market demand, which is something Google was unwilling to do. Google’s statements and behavior indicate that Kansas City’s willingness to allow demand to drive Google’s deployment and avoid unnecessary regulatory costs and delay were the critical factors in Google’s decision to enter the market.

Read Campbell’s full Ars Technica op-ed here.