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Google buying $39M fiber service in Utah for $1

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Re: Google buying $39M fiber service in Utah for $1

#11

Post by SoftwareMaven »

vyrotek wrote: post #6
SoftwareMaven wrote: post #5

A $39M fiber service that has been a constant drain on the city's coffers and is in serious need of upgrading. I read that the fiber pull is about half the cost of this; the other half is the routers, switches and other equipment it takes to make it work. I'm sure Provo City is breathing a sigh of relief at getting that weight off their back. And I'm hoping that Googke will decide to extend its market to outlying com…

Dang, your wife won't move to Provo either? Ok, I don't really want to move there either. But sometimes sacrifices have to be made in the name of fast internet! On a more serious note. I had heard that Lehi did make a pitch to get Google Fiber when this first started. I wonder if there's still enough interest. This area is growing like crazy and it's rural enough to make installation easy.

I can't imagine Provo by itself is a big enough market to be interesting to Google. The entire county isn't much more than half the size of Austin. I have to believe that they see Provo as the starting point for entry into the Wasatch Front.

Re: Google buying $39M fiber service in Utah for $1

#12

Post by VanillaCafe »

SoftwareMaven wrote: post #5

A $39M fiber service that has been a constant drain on the city's coffers and is in serious need of upgrading. I read that the fiber pull is about half the cost of this; the other half is the routers, switches and other equipment it takes to make it work. I'm sure Provo City is breathing a sigh of relief at getting that weight off their back. And I'm hoping that Googke will decide to extend its market to outlying com…

Also that Provo residents receive free 5 Mbit/sec internet for the next eight years. I assume that is to offset the $39M, which I read was equivalent to $8/mo/resident for the next seven years.

Re: Google buying $39M fiber service in Utah for $1

#13

Post by SoftwareMaven »

zapdrive wrote: post #7

I am sure many more companies would have been interested in this deal. When it comes to selling the infrastructure built with tax-payer money, the government should be more transparent in its dealings. The city of Provo should have advertised the sale or lease of its fiber infrastructure and let companies bid on it. And the fiber should have gone to the highest bidder. Or at least, accept offers from multiple compani…

Provo has been trying to unload their fiber network for a long time. I don't see this as a backroom deal that only benefits Google, but rather somebody finally putting the "under contract" sign above the "for sale" sign.

That nobody else came calling (or offered deals as good as Google's) is not Google nor Provo's fault.

From a taxpayer perspective, they get to stop paying for the upkeep on what is currently an unprofitable system. And those who keep paying for it get a significant upgrade.

Re: Google buying $39M fiber service in Utah for $1

#14

Post by jpatokal »

Since nobody has pointed out the obvious: buying things for $1 in the business world means that the thing has negative book value (= its liabilities exclude its assets), but not so much that you'd want to structure the sale the other way around (= Provo paying Google to get rid of the thing). So Google's not getting $39m worth of stuff for $1, they're getting $39m worth of assets plus $Nm worth of liabilities (where n > 39) for $1. See also: http://en.wikipedia.org/wiki/Peppercorn_(legal)

Also, paying $39m to build something doesn't mean the resulting asset is actually worth $39m any more, but that's another story.

(And obligatory disclaimer: I have no personal knowledge of how the valuation was actually made.)

Re: Google buying $39M fiber service in Utah for $1

#16

Post by fjarlq »

jpatokal wrote: post #14

Since nobody has pointed out the obvious: buying things for $1 in the business world means that the thing has negative book value (= its liabilities exclude its assets), but not so much that you'd want to structure the sale the other way around (= Provo paying Google to get rid of the thing). So Google's not getting $39m worth of stuff for $1, they're getting $39m worth of assets plus $Nm worth of liabilities (where…

> So Google's not getting $39m worth of stuff for $1, they're getting $39m worth of assets plus $Nm worth of liabilities (where n > 39) for $1.

Pete Ashdown of Xmission says "Google will not assume any of the debt, the Provo city taxpayer will continue paying that."

http://transmission.xmission.com/2013/04/18/the-1-fiber-opti...

Who is right? I haven't looked into it.

Re: Google buying $39M fiber service in Utah for $1

#17

Post by YeahKIA »

fjarlq wrote: post #16
jpatokal wrote: post #14

Since nobody has pointed out the obvious: buying things for $1 in the business world means that the thing has negative book value (= its liabilities exclude its assets), but not so much that you'd want to structure the sale the other way around (= Provo paying Google to get rid of the thing). So Google's not getting $39m worth of stuff for $1, they're getting $39m worth of assets plus $Nm worth of liabilities (where…

> So Google's not getting $39m worth of stuff for $1, they're getting $39m worth of assets plus $Nm worth of liabilities (where n > 39) for $1. Pete Ashdown of Xmission says "Google will not assume any of the debt, the Provo city taxpayer will continue paying that." http://transmission.xmission.com/2013/04/18/the-1-fiber-opti... Who is right? I haven't looked into it.

You can't blame google if the government officials were stupid enough to not extract the right value out if their assets

Re: Google buying $39M fiber service in Utah for $1

#18

Post by _account »

This is something I've seen before, and expect more of.

Municipalities[taxpayers] paying to build out infrastructure, "mismanaging it"[then usually underfunding the administration because everyone wants 'small government', and then having the infrastructure scooped up for peanuts by a private company who makes a killing.

It's actually happening right now in slow motion in my hometown.

Re: Google buying $39M fiber service in Utah for $1

#19

Post by jessriedel »

_account wrote: post #18

This is something I've seen before, and expect more of. Municipalities[taxpayers] paying to build out infrastructure, "mismanaging it"[then usually underfunding the administration because everyone wants 'small government', and then having the infrastructure scooped up for peanuts by a private company who makes a killing. It's actually happening right now in slow motion in my hometown.

Given your derision for the term "small government", I'd guess you think this is a corrupt practice and that such infrastructure shouldn't be sold. But--at least to a small-government-er like myself--this seems like even better evidence that the municipality shouldn't be trusted with building these things in the first place.

Re: Google buying $39M fiber service in Utah for $1

#20

Post by hristov »

fjarlq wrote: post #16
jpatokal wrote: post #14

Since nobody has pointed out the obvious: buying things for $1 in the business world means that the thing has negative book value (= its liabilities exclude its assets), but not so much that you'd want to structure the sale the other way around (= Provo paying Google to get rid of the thing). So Google's not getting $39m worth of stuff for $1, they're getting $39m worth of assets plus $Nm worth of liabilities (where…

> So Google's not getting $39m worth of stuff for $1, they're getting $39m worth of assets plus $Nm worth of liabilities (where n > 39) for $1. Pete Ashdown of Xmission says "Google will not assume any of the debt, the Provo city taxpayer will continue paying that." http://transmission.xmission.com/2013/04/18/the-1-fiber-opti... Who is right? I haven't looked into it.

I think the issue is that the city paid a bunch of money to build the system but still cannot run it for a profit. So the city has to keep paying ongoing losses for the system in order to run it. They can shut it down of course, but that would be a big black eye for the politicians. So they gave it away to Google, who promised to run it and provide free internet to people for a very low setup fee.
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