The Beginning of the End of AT&T's and Comcast's Reign

The internet service providing industry has been dominated by a few huge players. But, Google's new product, Fiber, may signal the end of internet service as we know it.

May 14, 2014 at 10:30AM

Fairly recently, Google (NASDAQ:GOOG) (NASDAQ:GOOGL) entered the Internet service providing industry with Google Fiber, an Internet service that is roughly 100 times faster than traditional broadband. At $70 per month, it's a bargain compared to the industry average of $65 per month for lower-quality service. Although it's only available in four cities in the U.S., data suggests it could spread like wildfire and wreak havoc on the profitability of current industry titans Comcast (NASDAQ:CMCSA) and AT&T (NYSE:T).

Google Fiber

Source: Google

Kansas City experiment has been wildly successful
Google Fiber was first installed in Kansas City, Kan. in 2011. According to an article from the Wall Street Journal, a whopping 42% of households surveyed in Kansas City currently use Google Fiber.  

Google Fiber could be huge
Although it is nearly impossible to quantify the rate at which Google can expand its new product, it seems the new service has some serious growth potential. Google is currently prospecting in 34 cities around the country. Coming up with fancy projections would be silly at this point. But, it's safe to assume that if Google can offer a superior product at a comparable price to its competitors, the growth potential could be astronomical.  

Many people don't like their current Internet options
If the majority of people were perfectly happy with their current Internet service providers, it would be one thing. But, satisfaction surveys suggest that many people would love to drop their current service.

In a 2013 J.D. Power survey, overall customer satisfaction among Internet service providers was rated 683 on a 1,000 point scale. The American Customer Satisfaction Index released a report, also in 2013, where ISP's received the lowest customer satisfaction ranking of any industry in America. 

Clearly, there is a window of opportunity for Google to enter this near-monopolistic market. 

Google's new service could mean trouble for AT&T and Comcast
For the heavy hitters in the ISP industry, Comcast and AT&T, Google's new service could harm their revenue and ability to generate profit. In 2013, Comcast generated 25% of its revenue from high-speed Internet service, and AT&T's wireline data segment accounted for 26% of the company's revenue in 2013. 

Although many of Comcast's customers may have been displeased with its service over the past five years, shareholders were probably quite pleased. Since May 2009, Comcast stock has nearly doubled the S&P 500 Index. AT&T stock is another story, however, generating about one-third the return of the S&P 500. 

If Google's new service catches on, the negative effect on the market share and profitability of Comcast and AT&T could be huge. But, of course, neither company will go down without a fight. 

In fact, AT&T has responded to the threat. Recently, the company announced that it may begin to string its fiber optic lines directly to homes to match Google Fiber's superior speed. The company also announced plans to build an all-fiber network in Austin, Tex. and charge customers $70 per month (Google Fiber is also $70 per month).

What all this means for shareholders of Comcast & AT&T
Regardless of how it all plays out, Google Fiber should be seen as a negative thing for shareholders of Comcast and AT&T. Even if the two companies are able to revamp their current infrastructure to match Fiber's speed, their market share and profitability will likely suffer.

Your cable company is 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. 


Michael Nielsen has no position in any stocks mentioned. The Motley Fool recommends Google (C shares). The Motley Fool owns shares of Google (C shares). 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers