Home
Internet
Internet News
Google Beaten to the Punch by AT&T on Super Fast Broadband

Google Beaten to the Punch by AT&T on Super-Fast Broadband

By Olga Kharif, Bloomberg | Updated: 25 April 2016 18:15 IST

Highlights

When Google first announced its plans, 1 gigabit speed was a novelty.
Google is present in four cities, while AT&T offers its service in 20.
Google's service costs $70 a month, while Comcast's service costs $80.

Google Fiber has yet to bring its super-fast broadband service to the city of Atlanta. But Comcast and AT&T know it's coming, and they're offering the 1 gigabit Internet speed Google promised and signing up new customers.

It's been six years since Google announced it would lay a fiber network to compete with cable providers and telephone companies. Although it's now in only four markets, competitors are lowering rates and building faster lines to keep customers from defecting to the technology giant. Because Google needs consumers to have robust Internet speed in order to sell more expensive ads on its search engine, that may be what it had in mind all along.

"There's a lot more bark than bite" behind Google's strategy, said Roger Entner, an analyst with Recon Analytics.

When Google first announced its plans, 1 gigabit speed was a novelty. With the faster speed, users can stream without buffering at least five high-definition videos simultaneously while also having enough bandwidth to e-mail and surf the Web. They can also download an entire movie in under two minutes.

Earlier this year, Comcast began testing cable-based gigabit technology in Atlanta, and plans to roll it out to Nashville, Tennessee; Chicago; Detroit; and Miami later this year. It's already selling a fiber-based, 2-gigabits-per-second service nationwide. The US gigabit leader, AT&T, is expanding to 36 more cities. FairPoint Communications Inc. and Windstream Holdings Inc. are also adding markets.

"The gigabit movement has become stronger," said Kamalini Ganguly, an analyst at researcher Ovum. "Google is feeling a little bit of competitive heat as a result."

While Google has only entered four cities serving fewer than 100,000 customers combined, according to Entner, AT&T now offers its GigaPower service in 20 metro areas. Including AT&T, the nation's other carriers now have as many as 1 million gigabit users, he said.

"Any time Google is doing three, AT&T is doing 30 cities," Entner said.

In the first quarter, Google parent Alphabet Inc. poured almost $280 million (roughly Rs. 1,867 crores) into capital expenditures primarily related to the fiber venture, which has resulted in lower prices for customers in its target areas. Markets that Google enters enjoy a $20-a-month drop in prices on average, Entner said.

Consumers often stick with the incumbents, even if they get speeds slower than 1 gigabit. Many customers in Provo, Utah, where Google Fiber was rolled out in 2014, have managed to wrangle lower rates by calling their existing providers and threatening to switch, said Wayne Parker, chief administrative officer for the city.

Google's 1 gigabit access costs $70 (roughly Rs. 4,600) a month, while Comcast offers lower-speed Internet access packaged with more than 80 TV channels for as little as $80 (roughly Rs. 5,200).

"We've heard from a lot of people, 'I am not going to go to Google because I don't need to get 1 gig, but I got a screaming deal from Comcast,'" said Parker.

At the end of March Google introduced a phone service that can be bundled with broadband and TV, similar to what cable and telecom companies offer. It's also trying out various business models such as using a local utility's fiber instead of building its own and experimenting with wireless technology to speed up the rollout, said Jill Szuchmacher, who is directing expansion of theFiber project for Mountain View, California-based Google.

"Our long-term goal is to create abundance in terms of connectivity and speed where there's a scarcity," she said. "In the cities where we are offering service, we have seen an increase in competitive offerings."

She declined to comment on whether Alphabet would consider buying an existing telecom or cable company to speed up the Fiber rollout. While the company doesn't release subscriber numbers, Google Fiber is expanding into seven more cities, although it declined to provide a timeline.

So far, analysts say Google isn't making a dent in the incumbents' results.

"Nowhere in this discussion of cable subscribers has Google even been relevant," said Paul Sweeney, director of North American research at Bloomberg Intelligence.

Internet provider CenturyLink Inc.'s chief marketing officer, Bill Hurley, said in a statement that Google Fiber "had no impact" on the company's decision to offer 1 gigabit service in portions of 19 states. The competition would help bring high-speed Internet access to underserved areas, he said. Google and other companies have been criticized for focusing on wealthy neighborhoods.

"We're pleased to see Google and other providers join us in helping to bridge the digital divide in America," he said.

The incumbents are benefiting from Google's entry as cities relax their requirements for buildouts, and strive to reduce permitting and other costs.

"Growing customer demand, advancing technologies and pro-investment municipal policies that lower construction costs have accelerated our recent network deployments," AT&T said last week in a statement.

In Austin, Texas, for instance, Google has been allowed to experiment with micro-trenching digging shallower pits for the fiber than are typically used.

"The activation is much faster and less expensive," said Rondella Hawkins, officer of telecommunications and regulatory affairs for the Texas capital.

Meanwhile, Atlanta is talking with Google and other providers about splitting the costs of opening up roads in places with existing municipal fiber, which the city wants to upgrade, said Kristin Wilson, Atlanta's deputy chief operating officer.

With three major providers fighting it out, "we are thrilled," she said. "We want options and competition for our citizens."

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.