Comcast and Time Warner Should be Terrified of Google Fiber, Internet Users Should Rejoice

When Google (NASDAQ: GOOGL  ) (NASDAQ: GOOGL  )  launched its fiber Internet network, Google Fiber, it was clear that one possible impact would be increased competition in the notoriously noncompetitive home Internet space.

And that's exactly what happened.

In Kansas City, one of Google Fiber's first locations, both Time Warner Cable (NYSE: TWC  ) and Comcast (NASDAQ: CMCSK  ) bumped up their Internet speeds this week -- sometimes by more than double -- while keeping the same monthly price.


Source: Google.

As the Kansas City Star reported, Comcast is doubling speeds for two of its packages and upping another package by nearly 50%. The top upgrade for Comcast will take Internet speed from 105 megabits per second to 150 Mbps in the city, while Google Fiber hits 1,000 megabits per second, or 1Gbps.

Google offers its 1Gbps service for just $70 per month. For half that speed, Comcast charges about $400 per month in most of its markets.

As the Star noted, Comcast offered similar upgrades in California and Texas before it brought the higher speeds to Kanas City. Google Fiber had been closed to new customers in Kansas City for a while, but a few weeks ago the company reopened sign-ups for its fiber service through the beginning of August -- giving Time Warner and Comcast a big incentive to increase Internet speeds for existing customers.

The bigger picture
Time Warner Cable today holds about 13% of the U.S. home broadband market, while Comcast has 24%. The two companies are in the middle of merger talks, with Comcast offering to buy Time Warner Cable for $45 billion in stock. That would give the merged company a combined U.S. Internet home service market share of 37%.

Even if a deal isn't reached, these cable giants face no immediate threat from Google Fiber. But that could easily change as Google moves into new cities. Evercore Partners estimates that Google Fiber could claim up to 3 million customers over the next seven to nine years -- making it one of the top 10 Internet providers in the U.S.

Google Fiber logo. Source: Google.

Aside from Comcast and Time Warner upping their speeds, Google Fiber has taken on AT&T's U-verse with GigaPower service as well. A few months ago, Google announced that Fiber would come to Raleigh and Durham in North Carolina, where AT&T already offers high-speed service. Last year, AT&T announced it would bring its service to Austin, Texas, just a day after Google said it would come to the city.

One reason Google likely wants to expand its own Internet service is to ensure it isn't controlled by the biggest Internet juggernauts in the U.S. Think of how Netflix paid Verizon and Comcast to make sure its video streaming service receives fast connection speeds in certain markets.

In February, Google announced that it was considering expanding Fiber into 34 new cities. Though it's unlikely the company will come to all of them soon, the possible expansion shows just how serious the company is about taking on the Internet service industry.

Earlier this year, Carlos Kirjner of Bernstein Research wrote that Google Fiber's growth might not bring the Internet giants down right now, but could bring big changes in the future: "It may not make a huge difference for Google or for the incumbents in the next one, two or three years, but Google is taking the long view and we think in five or more years, it could turn out to be a significant, profitable business for Google and headwind for incumbents."

With Comcast and Time Warner already responding in markets in which Google Fiber is growing, this may just be the beginning of real competition in the home broadband space. 

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

 

Read/Post Comments (15) | Recommend This Article (24)

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 August 10, 2014, at 12:34 PM, Freddyfreebe1 wrote:

    Internet providers got greedy and over price for there service. Higher price for speed is a one way ride, they are not passing on a higher cost. Most people don't hardly use the internet but pay dearly for the little they use it. Other are paying for high speed while getting low speeds. Internet speeds can become an over night scam because most people don't understand what they are really getting for there money.

  • Report this Comment On August 10, 2014, at 12:43 PM, networldsystems wrote:

    Ready to subscribe to Google fiber and already own Google stock!

  • Report this Comment On August 10, 2014, at 12:58 PM, segarolow4 wrote:

    Great! But the thing is.. WHEN will it get to you?

    It maybe years on end yet. If that......

    So its no help to say 95% of the US public... At this time..

  • Report this Comment On August 10, 2014, at 1:01 PM, cordycep wrote:

    Even if they increase the speed they want to charge by data. Recently comcast double my bandwidth for free...it is coincident since they want to by TW.

  • Report this Comment On August 10, 2014, at 1:03 PM, Mdon3621 wrote:

    Verizon apparently decided to stop or curtail its buildout of its fiber network and concentrate on wireless. I have always thought that Verizon could take on and beat the major cable companies in this country with its fiber buildout. I hope they change their direction and really concentrate on fiber. Verizon's fiber services are excellent.

  • Report this Comment On August 10, 2014, at 1:29 PM, VegasSmitty wrote:

    If the FCC did its job, we'd all have gigabit by now.

  • Report this Comment On August 10, 2014, at 1:53 PM, mptnofool wrote:

    This is all one big monopoly, regardless of the Google service. All of the providers have locked in a single price point. They are competing on speeds that most users do not want or need. Most people would be fine with current speeds at a fraction of the cost. If Google offers 1000mbs for about $70/month, can we please have 500mbs for $35, or 200mbs for about $20/month? Of course not, it's all a big ripoff. The speed thing is a red herring to charge astronomical fees. Time for cities to get serious about public infrastructure, and build out networks that all can use at a reasonable cost. Internet access today is practically as necessary as is electricity and water. We have dangerously ceded the access to a few companies that will squeeze every last penny out of us. Internet should be available much like a public utility. The consumer is getting raped, regardless of the 'speeds'.

  • Report this Comment On August 10, 2014, at 2:07 PM, Swordedge wrote:

    If Google fiber shows up here, I will make vapor trails moving to them. Do those idiots not realize that after while, there will be sufficient speed for anything we do? Our need for more speed will slow down after another decade or so.

  • Report this Comment On August 10, 2014, at 3:45 PM, Fiberguru wrote:

    It is true that Comcast is reacting to Google in the markets listed above. Still, their speed is a shared speed so even if they are selling the same speed for less it's just not the same as what Google Fiber is offering.

    In Florida, Comcast is up against another Fiber To The Home provider, Hotwire Communications. They are smaller and compete on a property by property basis because in Florida most communities purchase Cable TV and Internet in long term Bulk contacts. The Comcast reaction in Florida has been one better. Comcast is actually pitching and installing Fiber To The Home. So Google is getting the press but it's Hotwire that has forced Comcast to do FTTH for the first time. That is the story! Of course they aren't doing it everywhere, just where they are competing directly with Hotwire.

  • Report this Comment On August 10, 2014, at 5:36 PM, Gertwise wrote:

    Competition is a good thing and neither Comcast nor Time Warner are worried about Google. They both have consistently upped their internet speeds every year or two for the same cost. I know Comcast offers 10gbs down in some markets to business customers. I live in the KC area and Comcast has 250mbs in some of the suburbs around KC and doing quite well in getting new signups for it from what I've heard.

    Your average internet user doesn't use the 100mbs speed let alone 1gbs

    I'm not knocking Google and like I said, competition is a good thing. With that being said, Google is kind of out of their bread and butter business and has a history of doing something for a couple of years and then moving on to something else. I'm wondering if that will happen with this.

  • Report this Comment On August 10, 2014, at 6:12 PM, msteg01 wrote:

    Heard of Google Postini service?

  • Report this Comment On August 10, 2014, at 8:46 PM, DocG1956 wrote:

    RIP TW...I have used you for 15+ years. You squeezed me like a melon in the grocery store. With no competition I have lived with a box that has 2 tuners. I called and relentlessly asked for an upgraded box but TW hasn't upgraded that box for more years than I can count. I am blessed to be in KC and GF has been ran right in front of my house. WOOO HOOO! TW would have to pay off my house and cars to get me to listen. They have repeatedly added features like whole house DVR that did nothing but show they cared about their bottom line and didn't listen to their customers. I should short your stock but I don't want to even have to think about you. Their margins will shrink and the net will blow away in the wind over time. Ahhhhh! I am so happy!

  • Report this Comment On August 10, 2014, at 10:08 PM, kktex12 wrote:

    It must be nice to have that high speed internet. I live just 2 miles from where both Comcast and Verizon terminate their fiber cables. They will not consider extending their services to me and about 50 other neighbors. We are forced to use satellite internet or internet via cell phone towers. They have provided their services to an almost vacant residential neighborhood that has been mostly vacant for at least 6 years. Six years of no income (probably many more) versus 6 years of income from 50 plus homes. Seems like someone needs to be fired.

  • Report this Comment On August 11, 2014, at 12:28 AM, ChMacQueen wrote:

    I'd be happy for now with a law that demanded companies can not offer different prices based on different locations or least different locations in the same state. Its ridiculous that you could be a comcast customer in one side of a city that also has google fiber as competition getting you better speeds and better deals. Then move to the other side of the city and no google fiber competition and they jack your price with cutting your package in half.

  • Report this Comment On August 11, 2014, at 1:27 AM, MercyKilling wrote:

    Seattle has had fiberoptic cable already laid by a contractor that abandoned the project....and yet Google Fiber is planning to go to Portland first. Most of the work is already done here...why don't they just move on in and oust Comcast already??

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: 3062895, ~/Articles/ArticleHandler.aspx, 12/22/2014 2:52:43 AM

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