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Google Fiber built its first network in Kansas City, and now wants to expand to Portland. The franchise agreement is a major milestone -- but many hurdles remain.

(Bloomberg Photo)

Google Fiber has hit a major milestone with Portland, inking a tentative franchise agreement for hyper-fast Internet in the city.

The deal doesn't guarantee Google will bring its fiber-optic service to Portland – the company still must evaluate local regulations, topography, existing utility networks and other factors that will influence its decision. The 29-page, 10-year franchise also needs sign-on from the city council – the franchise is scheduled to go before commissioners May 7.

Additionally, Portland and Google must reach agreement on the company's desire to put big "network huts" on public property in parts of the city, and small utility cabinets on parking strips in neighborhoods throughout Portland.

But the franchise agreement brings service a good deal closer, outlining the terms under which Google would operate in Portland.

“This franchise agreement is an important step along the path to Fiber. It gives us permission to build here, and it also outlines the ways that we’ll partner with the city to invest in local infrastructure and give back to the community,” Google spokeswoman Jenna Wandres said in a written statement. “There’s still a lot of work to do beyond this one agreement, but we hope to provide an update about whether we can bring Fiber here later this year.”

Google announced in February that it hopes to bring its fiber-optic service to Portland and five other cities in the metro area – Beaverton, Hillsboro, Gresham, Lake Oswego and Tigard. The company plans to offer connections at 1 gigabit per second – roughly 100 times faster than standard broadband connections now – along with an accompanying cable TV service.

Companies need franchise agreements to install utility lines in the publicly owned right of way. Google’s deal resembles Comcast’s existing franchise agreement with Portland in some ways, with some notable differences.

Portland agreed to a different type of franchise because it expects different types of benefits from Google’s service, according to Mary Beth Henry, director of Portland’s Office for Community Technology.

“The overall public benefits are commensurate with the kinds of public benefits available under local cable franchises for many years,” Henry wrote in an e-mail

Here’s an overview of Google’s deal:

What's a gigabit?

Who needs one?

What's it cost?

Which suburbs would get it?

• Google would pay 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.

• Portland levies a 3 percent fee on Comcast’s TV service to cover the cost of locally produced public access, educational and governmental (PEG) cable TV programming. In lieu of that fee, Google would offer free gigabit Internet service to some nonprofits and up to three free Wi-Fi networks in parts of Portland – conferring with the city on specific locations. Google would also offer free Internet service for at least seven years, at considerable slower speeds, to customers who pay a one-time installation fee. In other markets, that fee is $300.

• The agreement does not require Google to serve all parts of the city. Google plans to roll out its service incrementally to “fiberhoods” where residents have demonstrated an interest in the service, so parts of Portland could go without service indefinitely. The franchise agreement says the city will be available to consult on picking service areas regarding neighborhood association boundaries and "public goals of equity and inclusion."

• Google’s TV service will offer the local PEG channels.

Comcast did not immediately respond to a request for comment on Google’s pending deal.

Portland and Google quietly began negotiating their franchise agreement last fall, months before the company announced its interest in serving the city. Portland has a particularly involved franchise approval process, and Google hasn’t started negotiations with the other cities yet.

While negotiating the franchise agreement, Portland was simultaneously working to meet Google's May 1 deadline for a checklist of information about Portland's existing utility lines and geography to help the company evaluate costs and strategies for building its network.

That work is proceeding apace, Henry said: “We will meet the checklist deadline.”

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