Please ensure Javascript is enabled for purposes of website accessibility

Here's How Comcast Is Responding to Google Fiber

By Daniel B. Kline - Mar 18, 2016 at 12:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company has a plan, but it does not appear to be a very good one.

Comcast (CMCSA 3.37%), at least on the cable and broadband side of its business, has never been all that good at handling competition. 

That makes sense for a company that, for a very long time, had monopolies or near-monopolies in the markets it offered service in. Recently, that has changed a bit with consumers having options for pay-TV and Internet service from satellite companies in the case of television, and telcos operating in both spaces. In nearly all situations on the broadband side, though, Comcast still had a better product than telephone company DSL. 

So, for most consumers who want an Internet connection in Comcast markets, there has either been no choice, or the option to pick generally inferior telco DSL service. That made it easy for the company to continue to act like a monopoly, because in many ways, it has been.

However, that is changing in markets where Alphabet's (GOOG -0.27%) (GOOGL -0.21%) Google FIber service has entered the fray to compete with Comcast's new Xfinity gigabit service.

On to Atlanta
While Google Fiber has only been rolled out in select cities, it is offered in Atlanta, where Comcast has chosen to introduce its own gigabit-speed broadband service. That makes the city a sort of battleground where the cable and Internet giant is showing off how it intends to compete in a market where it has a worthy rival.

In this case, Comcast has a three-pronged plan of attack. First, the company has launched a marketing campaign backed by a web page touting its service's superiority. That page shows the Xfinity product as offering 725 Mbps in-home Wi-Fi speed while claiming that Google FIber only has 30 Mbps. It also claims that Comcast's service offers the "most Wi-Fi coverage for all rooms," and that it has "unmatched online security."

The second piece of the puzzle involves Comcast's pricing. The company is offering its new premium high-speed service for $70 a month without data caps if customers sign a three-year contract with an early termination fee of $350, which drops on a monthly scale, Ars Technica reported. Customers who don't want to sign a contract will pay $139.95 a month for service with a 300GB-per-month data cap (though there is a $35 a month option for unlimited service).

As for the third piece, well, let's call it grassroots, as the cable company has been distributing flyers in Atlanta urging people not to "fall for the hype" of Google Fiber.

How does Google's offer compare?
It's easy to see why Comcast wants to lock people up for three years, but it's hard to see how its offer will be appealing given Google's pricing. In Atlanta, Fiber's price for gigabit service is a straight $70 a month with a $100 installation fee waived with a one-year commitment. 

Google is serving condos and apartments first. Image source: Google. 

Even if everything Comcast claims about its service's advantages over its rival is true, it's hard to picture anyone being willing to sign a three-year contract in order to pay the same price he or she can get on a one-year deal from Google. Effectively, that leaves Comcast with a plan to compete that revolves around attempting to convince people that the competitive offering is vastly inferior.

That seems like a bad play, here, because Comcast is not competing against telcos that may not have the best reputations. In this case, it's coming up against a brand with a reputation for both innovation and integrity.

Fighting Google using higher prices and scare tactics won't work, and it could doom Comcast's efforts to bring in a customer base for what appears to be a promising product.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Alphabet Inc. Stock Quote
Alphabet Inc.
$2,174.75 (-0.21%) $-4.51
Comcast Corporation Stock Quote
Comcast Corporation
$40.29 (3.37%) $1.31
Alphabet Inc. Stock Quote
Alphabet Inc.
$2,181.62 (-0.27%) $-5.83

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.