Why is Google Receiving Preferential Treatment Over AT&T and Time Warner?

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In order to persuade Google (NASDAQ:GOOG) to build its high-speed fiber network in their cities, officials in Kansas City, Kansas, and Kansas City, Missouri, offered the Internet company free and discounted city services. However, Google’s Kansas City competitors caught wind of the special treatment; now, AT&T (NYSE:T) and Time Warner Cable (NYSE:TWC), the current Internet and TV providers in the city, want the same deal.

According to the Wall Street Journal, which obtained a copy of the agreement on file, Google was offered free office space, a team of government employees “dedicated” to the development of Google’s Gigabit Internet service, and the use of all city “assets and infrastructure,” including fiber, buildings, and land. The prospect of the service was so appealing that officials offered a nearly 50 percent discount on the fees companies typically pay for hooking their lines to city poles.

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Time Warner Cable has been negotiating with Kansas City, Kansas, for months to get a “parity agreement” granting it the same concessions as Google. According to both the city and the company, Time Warner already signed a similar deal with Kansas City, Missouri. However, while AT&T has approached the cities for the same deal, no agreements have been made.

“There are certain portions of the agreement between Google and Kansas City, Kan., that put them at a competitive advantage compared with not just us but also the other competitors in the field,” Alex Dudley, a Time Warner Cable spokesman, toldWSJ. “We’re happy to compete with Google, but we’d just like an even playing field.”

Google’s fiber network will offer pay-television and Internet at a speed of one gigabit per second, a speed that the company says will allow a person to download one season of “30 Rock” in 30 seconds. After an initial $300 construction fee per home, the Gigabit service will cost customers $70 a month. Kansas City was chosen from more than 1,100 cities that were interested in having the Google Fiber network built in their areas.

The service will begin in the first neighborhood, Hanover Heights, at the end of October.

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