Google Fiber Is Shaping Up to Be an Expensive Headache for AT&T

AT&T (NYSE: T  ) wants to expand high-speed fiber Internet access to 21 major metropolitan areas. Fool contributor Tim Beyers explains the company's motivation, and its implications, in the following video.

In a press release earlier this month, AT&T said it plans to expand ultra high speed broadband to as many as 100 cities and municipalities. Plans call for U-verse TV with GigaPower Internet at speeds "up to 1 gigabit per second." The announcement comes just weeks after Google (NASDAQ: GOOGL  ) (NASDAQ: GOOG  ) committed to expand its fiber service to as many as 34 municipalities.

Tim says it's a game one-upmanship that benefits Google investors nearly as much as it hurts AT&T investors. Why? Google is flush with more than $57 billion in cash and investments versus about $8 billion in debt. By contrast, AT&T counts 46.6% of its entire capital as debt -- a limitation that could prevent the company from rolling out ultra service as fast as executives might like.

In response, the telecom used the rollout PR to essentially lobby for local assistance. Lori Lee, senior executive vice president of AT&T Home Solutions, said the company is interested in working with communities that offer "solid investment cases and policies." Translation: Those cities that offer us tax relief and development funds can expect us to invest. Those that don't, well ... don't hold your breath.

Now it's your turn to weigh in. Do you believe AT&T will invest what it takes to compete with Google Fiber? Or do you expect the search king to make the big investments required to become a top national supplier of high-speed broadband? Please watch the video to get the full story, and then leave a comment to let us know your take, including whether you would buy, sell, or short AT&T stock at current prices.

Why you might invest in AT&T anyway...
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term, and AT&T yields more than 5% as of this writing. But high yields alone aren't enough. Wealth is the result of a well-constructed dividend portfolio. How to build one? Our top analysts give you the answer in a new report on high-yielding stocks that should be in any income investor's portfolio. Click here now for your copy -- it's 100% free.

Read/Post Comments (3) | Recommend This Article (2)

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.

  • Report this Comment On April 29, 2014, at 9:52 PM, wjcoffman wrote:

    Go GOOGLE! I hope they put the screws to AT&T. (T) added a $10 charge because I went over my 150GB/month limit. Really? Never mind I have lightening (sic) quick DSL. Thieves.

  • Report this Comment On April 30, 2014, at 10:21 AM, DFG100 wrote:

    Google is doing a good thing for the market in that there may be a possibility that its installations will eventually force price cuts by the traditional ISPs. Without this kind of market move consumers cannot count on the FCC to force competition to give consumers higher speeds at lower prices. Remember, even at 1gig speeds we in the US still lag far behind other countries such as Japan and China in high speed low cost internet services. That said Google does not pay dividends. In my view that makes them not a candidate to buy. AT&T does pay dividends and will be around a long time. Go for the dividend payer!

  • Report this Comment On April 30, 2014, at 4:45 PM, tmc80tmc wrote:

    NOT deploying a 21st century network back in 2006 when they should have been is THEIR fault, not that of google!

    AT&T should have leveraged BellSouth to build the network, instead they slowly reneged (or walked away from) their promises as conditions of the merger and went to go on to DUOPOLIZE the wireless industry by destroying competition there (and their little unlimited data plans too, snickering like a wicked witch or the mogul Mr. Burns from the Simpsons all the while).

Add your comment.

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: 2936074, ~/Articles/ArticleHandler.aspx, 9/1/2015 8:37:36 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...

Tim Beyers

Tim Beyers first began writing for the Fool in 2003. Today, he's an analyst for Motley Fool Rule Breakers and Motley Fool Supernova. At, he covers disruptive ideas in technology and entertainment, though you'll most often find him writing and talking about the business of comics. Find him online at or send email to For more insights, follow Tim on Google+ and Twitter.

Today's Market

updated Moments ago Sponsored by:
DOW 16,058.35 -469.68 -2.84%
S&P 500 1,913.85 -58.33 -2.96%
NASD 4,636.11 -140.40 -2.94%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/1/2015 4:00 PM
T $32.32 Down -0.88 -2.65%
AT&T CAPS Rating: ****
GOOG $597.79 Down -20.46 -3.31%
Google (C shares) CAPS Rating: ****
GOOGL $629.56 Down -18.26 -2.82%
Google (A shares) CAPS Rating: ****