When Google comes to town: Louisville's word of caution for Toronto
As Toronto eyes Sidewalk Labs, Louisville, Ky., is assessing the fallout from its deal with Google Fiber
Google's Sidewalk Labs is facing increased pushback to its proposal to build a futuristic neighbourhood in Toronto, after leaked documents revealed the company's plans are more ambitious than the public had realized.
One particular proposal — which would see Sidewalk Labs taking a cut of property taxes in exchange for building a light rail transit line along Toronto's waterfront — is especially controversial.
The company has developed an impressive list of promises for its proposed neighbourhood, including mobile pre-built buildings and office towers that tailor themselves to occupants' behaviour.
But Louisville, Kentucky-based business reporter Chris Otts says that when Google companies come to town, it doesn't always end well.
His own town is still reeling after a letdown from Google Fiber, another Alphabet, Inc.-owned company that promised to service Louisville with cheaper high-speed Internet.
Earlier this month, Google Fiber announced it will pull out of Louisville after admitting it had fallen short of its own standards.
Day 6 asked Google Fiber if what happened in Louisville should weigh on the minds of Torontonians as they consider Sidewalk Lab's proposal. Angie Welling, head of communications for Google Fiber, said those two are unrelated.
"It's important to remember that, given the current structure of Alphabet, Google Fiber and Sidewalk Labs are two distinct companies, with separate leadership teams and business goals," she wrote in an e-mail to Day 6.
"Just like you wouldn't expect a business decision made by Benjamin Moore to impact operations at Duracell or Fruit of the Loom (all Berkshire Hathaway companies), the same is true for us -- business decisions at Fiber are totally unrelated to operations at Sidewalk Labs."
Otts told Day 6 host Brent Bambury that Louisville was excited when Google Fiber came knocking, but the city now feels like it was treated as test lab.
Here's part of that conversation.
What was the promise Google Fiber made to Louisville back in 2015?
Well, it was just to be included as one of their Fiber cities, which was a pretty serious deal for Louisville at the time. A big coup for the mayor, and his administration had been working for years to get Google to consider adding Louisville to that list.
So if the city was eager, what sorts of accommodations were made for Google to entice them to come to Louisville?
Basically, the city did everything it could from a streamlining red tape perspective to get Google here ... in terms of, you know, awarding them a franchise, and allowing them to be in the rights of way with this innovative technique they had for burying their cables here.
And then also, they [the city] passed a policy, which, to be sure, they say is just good policy regardless of Google's support for it. But it had to do with how new Internet companies like Google can access utility poles to install their networks.
And Louisville ended up spending hundreds of thousands of dollars to defend that new policy in court in lawsuits by AT&T and by the traditional cable company here.
So these were the companies that would have been in competition with Google Fiber had Google Fiber stayed in Louisville.
But do you think the accommodations that you just you just mentioned would have been made for any other company? If it didn't have the name Google attached to it, would they have been as eager to see them come into town?
I think the accommodations — well, certainly, the city leaders would say that they would. I mean, they've always had a posture of 'we are just welcome and open for anyone' ... but certainly, Google's support for the utility law that I talked about definitely was a catalyst in getting that through the city council at the time.
When Google Fiber starts doing business, they're offering cheaper high speed Internet access, and they start burying these cables in the ground. When did things start to go sideways for this project?
I don't know if I would say 'almost immediately,' but certainly the problems were evident fairly quickly.
It was a real kick in the gut .... People who were really looking forward to getting the service were disappointed.- Chris Otts
So they started their work in 2017. If you picture it, [in] the streets you can see on either side there are these seams. They look like little strings ... near the end of the streets on both sides. And there are cuts in the street where they buried the cable and they topped it off with this sealant.
And fairly early on — within months, I would say, of them doing that — you could see the sealant popping out. The conduit in there [was] visible or exposed. And so it was fairly evident that there were problems with it pretty quickly.
Was this the first time that they had used this system and the sealant that you're describing?
It was the first time, according to them, that they had used such shallow trenches in the streets.
So these are as shallow as two inches below the pavement surface that they'd bury these cables. It's the ultra-shallow version of this technique that they were trying to see whether it could work sustainably in Louisville.
Clearly it hasn't worked, because earlier this month Google Fiber says it's going to pull out of Louisville. But what do your roads look like now?
In a lot of places, they have gone over and put in asphalt, which is not really a perfect looking patch. It kind of looks like a little bicycle tire track with a little mound to it. And then in many other places, they haven't fixed the original sealant that was popping out.
So you still have that ... snaking of this rubbery stuff on the pavement and these open trenches in the streets. There's a fair amount of work that needs to be done to restore all that before they up and leave.
Describe for us what it was like in Louisville earlier this month when Google Fiber said it was pulling out.
It was a real kick in the gut. A lot of people were very upset.
People who were really looking forward to getting the service were disappointed, people who had this service were disappointed.
And then several residents who didn't really care or really understand what all the hubbub was about regarding Google were just really peeved at the condition of the streets and how we had allowed all this construction to happen, and all this disruption, and not really gotten anything out of it.
These big companies can change their mind on a dime and it doesn't really matter how disappointed folks are in the markets that they serve.- Chris Otts
So lots of people were upset. ... I think city officials were were likely embarrassed since they had made so much of Google choosing Louisville and coming here.
It felt like a real turnabout. And as I said, just a real punch in the gut.
And what explanation did Google Fiber offer for their decision to leave Louisville?
That it was basically a business decision; that they were trying this construction method to see if it was sustainable and they just had too many problems with it.
And as they said directly in their ... written statement about this, they decided that instead of doing things right and starting over, which they would have to do essentially to keep providing service in Louisville, that it was the better business decision for them to just pick up and leave.
Toronto's Sidewalk Labs isn't Google Fiber — but they're both owned by Google's parent company, Alphabet.
If Louisville could give Toronto a piece of advice about welcoming a Google infrastructure project to town, what do you think that advice would be?
The biggest lesson from this is that one day they can be next to you at the press conference saying what a great city you are and how happy they are to ... provide new service in your market, and then the next day, with almost no notice, they can say, "You know what? This doesn't make sense for us anymore. And by the way, see ya. Thanks for having us. Sorry it didn't work out."
So I think that, you know, the lesson is that these big companies can change their mind on a dime and it doesn't really matter how disappointed folks are in the markets that they serve.
This interview has been edited for length and clarity. To hear the full conversation with Chris Otts, download our podcast or click the 'Listen' button at the top of this page.