Internet Wars: AT&T and Google Go at It Again

AT&T (NYSE: T  ) can't seem to stay out of the news lately. The company has had some very public battles with T-Mobile, but its new target appears to be Google (NASDAQ: GOOG  ) (NASDAQ: GOOGL  ) .

AT&T announced this week that it's considering expanding its fiber optic Internet network, called U-Verse with GigaPower, into 100 new markets. But the news may be more of a pushback against Google than a great move for investors.

Big deal, or big disappointment?
Let's get this out of the way first: AT&T is not guaranteeing that it's expanding its ultrafast Internet into 100 new markets. The company is saying that there are 100 new candidate markets that could possibly receive its faster Internet. The announcement actually comes just two months after Google said it's considering expanding Google Fiber Internet service into new markets. As coincidence would have it, AT&T's candidate markets are almost exactly the same as Google's candidates. What a small world. 

AT&T said in a press release that, "This expanded fiber build is not expected to impact AT&T's capital investment plans for 2014." This means that it won't be doing much actual Internet expansion this year above what's already previously been announced.

That's not to say that some cities in AT&T's list won't get fiber services, but rather that none have been confirmed. Much of it will depend on how well the cities can work with AT&T to bring the service to their towns.

Google has a similar strategy when considering new markets for its Internet service, and neither of the companies will bring their fiber optic network to all of the candidate cities -- at least not right now.

How it could help AT&T
While AT&T may have made its recent announcement to make sure it keeps up with Google Fiber, the news isn't exactly irrelevant.

Part of Google's initial strategy when first launching Google Fiber was to push Internet service providers to up their Internet speeds, as well as increase competition. That's clearly paying off right now as AT&T is following in Google Fiber's footsteps.

In the long term, it could also help AT&T differentiate itself from competitors like Comcast and Time Warner Cable, which are in the middle of a possible merger. Most of AT&T's current fiber optic service offers speeds at 300 megabits per second right now, but will soon increase to up to 1 gigabit per second. When it's upgraded, AT&T U-Verse with Gigapower will be 100 times faster than average home Internet speeds.

As Barrron's Tech Trader blog pointed out recently, AT&T's ultra fast Internet expansion could eventually hurt Time Warner, since it would be moving into more markets where the cable company exists. But for now, AT&T's focus is squarely on fighting Google in the wired Internet space.

Foolish final thoughts
While it's good for competition that AT&T is looking to expand U-verse with Gigapower, right now, there's not much upside for investors. Ultimately, I think Google has a bit of an advantage with ultra-fast Internet, as many users aren't typically happy with any cable providers' customer service, and Google's a new player offering customers a brand-new product.

The good news for AT&T is that it's actually moving quickly to try to keep up with Google's latest moves. While other Internet providers may be a bit behind, AT&T is trying to match Google in both Internet speed and locations, which will at least help AT&T stay ahead of the non-Google competition.

AT&T may be scared, but you can get rich
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 

 


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2925184, ~/Articles/ArticleHandler.aspx, 12/22/2014 12:58:02 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement