AT&T today launched the company’s gigabit broadband service, dubbed U-verse with GigaPower, in parts of more than five cities in the Kansas City metro area. Additionally the company said it will expand the service to Independence, Mo. and Shawnee, Kan.
Google Fiber already offers or plans to offer gigabit service in all but two of the seven cities referenced in today’s press release about the AT&T launch. It’s a reality that suggests either that AT&T, the incumbent carrier in all or most of these communities, is feeling competitive pressure from Google or that AT&T was lured by the favorable terms Google has been able to negotiate with the cities in which it is installing fiber – or both. The favorable terms typically include expedited permitting processes, an exemption from having to offer gigabit service throughout an entire city and other terms that add up to a more attractive business case for network operators.
Kansas City was the first place where Google announced plans to deliver gigabit service, and what has happened in the Kansas City metro area since could be good news for other gigabit markets. Once neighboring communities hear from end users that have experienced ultra-high-speed service, they often work hard to gain gigabit service for themselves.
It’s worth noting that two of the markets referenced in AT&T’s release today – Leawood, Kan. and Independence, Mo. are not Google Fiber markets. When Google opted out of an agreement to deploy gigabit service in Leawood, AT&T stepped in to offer service. Residents of Independence have been asking for Google Fiber – and AT&T apparently saw an opportunity to beat out Google in announcing plans for the market.
AT&T Vs. Google Fiber
It’s a bit surprising to see two or more companies deploying fiber in the same areas, considering the high cost of deploying fiber to the home. Typically network operators deploy FTTH only where they expect to achieve substantial take rates – and those take rates become more difficult to achieve as the number of companies competing for the same customers increases.
It would appear, though, that AT&T has determined that in many markets, the downside of not deploying FTTH is worse than the downside of competing with Google in offering ultra-high-speed service. And that’s a realization that some other incumbents are coming to as well.
Google, meanwhile, may wish to minimize the public relations fallout from backing out of previously announced gigabit markets – and Google’s business case reportedly is quite different from that of other carriers because gigabit service yields substantial revenues for the company’s traditional Internet search, advertising and content business.
There may be other overlapping markets as well because AT&T’s release says the company also is launching gigabit service in other “surrounding communities” in the Kansas City area.