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Will Google Fiber dominate the cable Internet market?

By Catholic Online (NEWS CONSORTIUM)
April 11th, 2013
Catholic Online (www.catholic.org)

Google Fiber is a lightning-fast fiber-optic Internet service that may give major Internet cable companies headaches. So far limited to the greater Kansas City area, Google Fiber has yet to make a major impression. However - with Austin, Texas next in line, chances are good that Google could build an entirely new source of revenue and turn the Internet industry upside down.

LOS ANGELES, CA (Catholic Online) - Fiber's arrival in Austin was supposed to be a closely guarded secret. It came to light after a local news outlet leaked the story a week ago that Google Fiber was going to be the subject of the joint press conference with Google and Austin Mayor Lee Leffingwell.

Austin appears to be a good fit for Fiber, since it's widely viewed as a domestic hotbed of IT. Beginning in mid-2014, local residents will be able to choose Internet service for $70 a month, or $120 a month with Fiber INTERNET service, at connection speeds 100 times faster than cable, according to Google.

The service is also expanding to Olathe, Kansas. While many exerts don't believe Google intends to take over the Internet connectivity market, Google CFO Patrick Pichette said "We really think that we should be making business -- a good business -- with this opportunity [Fiber], and we're going to continue to look at the possibility of expanding."

Investors and Google shareholders should like the sound of that; more revenue streams mean less reliance on Internet advertising.

Cable Internet providers have not shown much concern as of yet. However, as Tim Bruger with The Motley Fool Web site points out, "My cable provider, Comcast, recently offered to crank up my Internet connectivity speed at no charge. That's right -- a cable company opted to improve service without charging. Interesting."

Bruger also says that "phone companies such as AT&T and Verizon began losing customers to these and other cable Internet providers some time ago, largely because of speed and connectivity issues. And now along comes Google Fiber with an alternative that blows the doors off anything Comcast, Time Warner, or Charter can offer, and often for the same or less money. If the cable industry isn't worried, it should be."

Google at the moment appears to be downplaying Fiber, at least in terms of how quickly it's chosen to roll the service out to mainstream America. As other Internet cable companies can attest, the opportunity for Google Fiber to become a significant source of alternative revenue can't be denied. Google certainly has the wherewithal to invest in Fiber for the long haul, with more than $48 billion in cash and equivalents, and operating cash flow that's off the charts.

"Fiber is going to change the way we connect to the Internet, and it's yet another example of why Google is close to an ideal growth stock. If it's not already, Google should be on your short list of investment options," Bruger adds.

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