Homes in Kansas City have, since November, been receiving the Google (GOOG) Fiber internet service that the tech company claims is 100 times faster than the typical broadband offering of any of the major telecoms who traditionally provide internet connection.
If the plan works out, it will look much the same as the Kansas City deal that allows residents to choose from standalone Gigabit Internet service, or a bundle service that includes almost 200 TV channels. As in Kansas City, Google will also offer residents of Austin a slower 5 megabit-per second service for a period of seven years, in exchange for a one-time construction fee.
AT&T, Inc. (T) was quick to criticize the deal and make a similar offer to the city of Austin.
In a statement, the telecom giant said that it anticipates its plans to expand fiber connection in Austin вЂњwill be granted the same terms and conditions as Google on issues of geographic scope of offerings, rights of way, permitting, state licenses and any investment incentives.
The move on Google's part comes at a time when more priority is being placed on faster internet connection speeds. The traditional telecoms have been seen to be lagging in this regard, as the U.S. as of last year was ranked only 12th in the world for average internet connection speed, according to data compiled by Akamai (AKAM). The same study reported that the average internet speed in the U.S. was 6.7 Mbps, not to far off from Google's free offering.
While countries in the European Union have long-term connection speed targets in the tens or hundreds of megabits per second, as recently as one year ago, only 15 percent of connections in the United States were in excess of the 10mbps threshold (though this figure represents almost a doubling of the previous year).
Regardless of what happens with AT&T's offer to the city of Austin, in a larger sense Google Fiber can be seen as one of the first serious swipes at the entrenched dominance of telecoms over how people connect to the internet.
It can also be seen as yet another attempt for the company with one of the most expensive stocks on the market to capture an even larger share of advertising dollars than it currently has (Google is in first place for mobile ad revenue, well ahead of Facebook (FB) who holds second place).
Consider the expense and contractual obligations that accompany any of today's typical broadband offerings from the big telecoms, it is hard to see how Google's plan could go wrong. If Kansas City and Austin become successful prototypes, and the company is invited into other cities for the same purpose, the company's exponentially simpler pricing scheme ($300 for a whole seven years of the 5 megabit service in Kansas City) could corner AT&T and others to drastically reduce fees and make contracts less cumbersome.
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