New York startups can compete to get a fiber connection

Startups in New York have a new competition that offers more than bragging rights or a trophy — although far less than the contest organizers would have you believe. The city is kicking off a challenge that will bring free fiber to the building of small businesses, though they will have to subscribe for at least one year’s worth of service.

The ConnectNYC Fiber Challenge, which is taking applications until Nov. 27, will offer $12 million worth of wiring work by Time Warner (s twc) and Cablevision (s cvc) to wire winning businesses. The city’s Economic Development Corporation, which is leading the competition, expects to provide a fiber connection to 100 businesses in the first year and up to 240 by the second year.

Fiber with strings attached

That’s right. The city is helping sponsor a contest where the winner will get free fiber wiring to a premise and a one-year contract at a negotiated rate with either Time Warner Cable or Cablevision. In exchange Time Warner and Cablevison get a new customer (that they get to approve ahead of time) who is locked into a negotiated contract for a year, and who will also sign away publicity rights for the following three years.

In some ways this is a smaller version of Google’s (s goog) competition to choose a city where it would deploy a fiber-to-the-home network. The search giant eventually got applications from more than 1,000 municipalities, but at least in that case Google was building out an entirely new network with miles and miles of new infrastructure. Plus Google would cover a larger area and the winning city didn’t have to agree to contract to buy service for a whole year.

Time Warner Cable

If this is what it takes to get high speed broadband deployed in this country, we are screwed. Letting ISPs pick and choose where and who they elect to cover puts even more power into the hands of uncompetitive ISPs. Plus they are making the end consumer do the work of getting their landlord on board with the build out –something ISPs have employees to take care of when they plan their expansions. And while ISPs do sometimes add the cost of deploying fiber-to-the-premise for business customers who ask for fiber, that’s not always a given.

That NYC gets a sweepstakes instead of an all-in fiber-to-the-premise deployment is frustrating. New York’s slow broadband has been a common complaint among startups in the city. Fred Wilson blogged last year that New York’s startup community needed more bandwidth and more fiber connections to thrive. So while this contest is nice in that it could offset the cost of wiring for fiber, it’s also not the answer to the city’s overall broadband problem.

Here’s what you need to know

Fiber Challenge applicants will be judged on how much impact a fiber connection will provide for workers and productivity; how close the applicant is to other businesses or industry clusters; and whether they are in an underserved area for broadband. Winners will be selected early next year according to four categories corresponding to where they are located: in a Cablevision or Cablevision Industrial Business Zone; or in a Time Warner or Time Warner Industrial Business Zone.

The final winners will be selected by the ISP “based upon the feasibility of wiring a finalist’s location and the potential revenue to the ISP.” So if wiring a business is too difficult or is not expected to bring back enough revenue, you may be out of luck. It costs an average of $50,000 to build out fiber to a business.

It’s not clear how big an impact the fiber build out will have on the startup community. If the ISPs seek out clusters of businesses in one building, it will be a help but could leave out many others who don’t happen to work alongside other applicants. But at least a quarter of the money will be spent on small companies in Industrial Business Zones, which are usually not as wired for high-speed broadband connections as other parts of the city.

The challenge is the latest step in New York’s efforts to build a local technology hub. The city has been trying to position New York as the competitor to Silicon Valley but it still struggles with some basic issues like broadband and talent, something the city’s Mayor Michael Bloomberg has been tackling with more Wi-Fi and a new technology campus.