Google's Next Conquest: New York City?

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Published March 02, 2014

| FOXBusiness

New York City could become the next battleground over the delivery of high-speed Internet thanks to the ambitions of the city’s new mayor to make the Internet more affordable -- and the ambitions of Google to dominate every aspect of the web -- the FOX Business Network has learned.

In recent weeks, Google (GOOG) announced that it is exploring the expansion of its Internet service, known as Google Fiber, into 34 new cities in nine metro areas across the nation; at the same time, New York City mayor Bill de Blasio announced that he wants to provide "truly universal access to high-speed Internet" in New York City, in order to make web access more affordable to the city’s poor.

The timing of the announcements led some industry observers to speculate that the company may be doing business in New York City -- something neither side would deny in interviews with FOX Business.

“The Administration is looking at options to lower broadband Internet cost to level the playing field for all New Yorkers in today's digital age,” a spokesman for de Blasio said, adding “there are no current formal discussions or commitments with any providers or stakeholders,” including Google.

A Google spokesperson said the company is “focused on our work in the 34 cities we announced last week, and our existing Fiber cities," which include cities such as Provo,  Utah, Atlanta and Nashville.

Noticeably absent from the initial list of target cities were major metropolitan areas such as Chicago, San Francisco and New York.

But that could change, particularly in the case of New York, since de Blasio has made affordable high-speed Internet service a cornerstone of his successful 2013 mayoral run, and he continues to address the issue in speeches.

This could also force other players such as Time Warner and Verizon Fios to step up their game in order to compete. That in and of itself would be a win for Google, as faster Internet speeds have been shown to help several of their key business segments.

“For Google, all of their internal research suggests that higher Internet speeds are better for their businesses in many ways, and that is clearly true for Google search, YouTube, Maps, and other Google services,” said Anthony DiClemente, a managing director at Nomura Securities covering media and Internet companies.

Google has repeatedly said it needs cities to lessen the red tape that can delay the expensive work of building a network street by street. Their Internet service is different than that of Time Warner Cable in that it relies on running fiber optic cables directly into homes, which isn’t an easy task. In fact, nearly three years after Kansas City beat out more than 1,100 communities to be the first to get the high-speed Internet service, the hookups have yet to be fully deployed.

“I’ll be surprised if they end up expanding to all nine (metro areas),” said Donna Jaegers, a telecommunications industry analyst at D.A. Davidson & Co. “They would like to stir the pot” and possibly pressure existing cable and phone companies to crank up their home Internet service speeds, she said.

When Google expanded to Kansas City, many speculated that there would be tax breaks involved, but instead the city offered other incentives such as giving Google access to public rights of way, expediting the process of getting permits, offering space in city facilities and providing assistance with marketing and public relations.

Whether New York would offer tax breaks or additional assistance like Kansas City remains unknown, but incentives like that could prove to be the hook that makes the tech giant’s high-speed Internet a reality in the nation’s largest metropolitan area.

Maya Wiley, the civil rights lawyer de Blasio selected to lead his campaign for affordable Internet, recently said, "I think the mayor's absolutely accurate when he says there are lots of levers that the city can pull to ensure access, and we will be pulling all of them."

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http://www.foxbusiness.com/technology/2014/03/02/google-next-conquest-new-york-city/