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

The search king’s efforts to expand is putting pressure on telecoms to respond.

Apr 29, 2014 at 7:35PM

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...
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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Google (A and C class) at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends Google (A and C shares). The Motley Fool owns shares of Google (A and C class). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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