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Kansas City, where this office is located, was Google Fiber's first market. The company plans to decide about serving Portland by the end of 2014. Service could begin in 2015.

( Julie Denesha/Bloomberg)

Portland commissioners voted unanimously Wednesday to approve Google Fiber's franchise agreement with the city, the biggest milestone to date in the company's plan to bring hyperfast Internet service to the city.

"It is such a good fit with who we are and who we will be in this city," said Portland Mayor Charlie Hales, joining his four colleagues on the city council in enthusiastically endorsing the project.

Google plans to decide by the end of the year whether to proceed with service in Portland and five suburbs (Gresham, Tigard, Lake Oswego, Beaverton and Hillsboro.) The company is evaluating local regulations, access to utility poles and regional topography to determine whether the network is technically and financially feasible.

In prerecorded testimony before the vote, Mary Beth Henry, head of Portland's Office for Community Technology, said they city expects Google will spend at least $300 million in Portland to build the network if it decides to proceed. (See clarification below.)

The company promises "gigabit" speeds, roughly 100 times faster than typical broadcast connections today, along with a broad cable TV package. Wednesday's franchise agreement removes one big regulatory hurdle, crafting an agreement that gives the company considerably more flexibility than Comcast has in how it operates.

Here's an overview of the agreement, first reached in April:

Google pays a 5 percent franchise fee on its video revenues, which utilities typically pass on to customers. Google said it's too soon to say whether it will do that in Portland.

Instead, Google pledges to provide free Internet service to unspecified nonprofits and up to three free, outdoor Wi-Fi networks in unspecified parts of the city. (City staff said Wednesday that it Google will serve 100 nonprofits; the franchise does not set a numerical threshold.)

Google will also offer free Internet service, at 5 megabits per second in exchange for a $300, one-time installation fee.

Google's TV service will offer the local PEG channels.

Unlike Comcast, Google Fiber is not required to serve all parts of the city. Google says it will operate in "fiberhoods" where subscribers reach a critical mass.

Portland and Google will participate in a "joint defense" of the franchise if it faces a legal challenge over allegations it gave Google Fiber preferential treatment, exceeded the city's authority, or violates the law in some way.

Here are some next steps:

Google still needs franchises in the other five cities where it wants to operate. The company has yet to begin formal franchise talks in those communities, though each met a May 1 deadline to complete a "checklist" of information about local geography and regulations.

Google Fiber wants to put about 200 utility cabinets in the public rights of way, in parking strips along streets throughout Portland. The city currently has a rigorous review process for such cabinets;

Google Fiber must reach licensing agreements with Portland utility pole owners, which include Portland General Electric, CenturyLink and others. Most have a standard process for providing access to their poles.

Sometime this fall, Portland's Office for Community Technology says it will propose a "digital inclusion" strategy to extend the service to low-income residents. City commissioners have suggested using some franchise fees generated by Google's service to

Clarification: The $300 million cost figure appeared, during Henry's prerecorded testimony, to be a firm commitment of Google's minimum investment in the Portland network should it decide to proceed. But the city and Google said afterward that the dollar figure is an estimate by city staff, not a figure provided by Google. The article has been updated to reflect that.)

-- Mike Rogoway; twitter: @rogoway; 503-294-7699