POSTED: 2:43 p.m. HST, Feb 19, 2014
LAST UPDATED: 2:46 p.m. HST, Feb 19, 2014
SAN FRANCISCO » Google wants to offer ultra-fast Internet service in 34 more cities scattered across eight states in the company's boldest challenge to cable and telecommunications providers.
The ambitious expansion of "Google Fiber" announced Wednesday targets major U.S. cities including Atlanta; Phoenix; Portland, Ore.; San Antonio and parts of the San Francisco Bay Area.
The service derives its name from the fiber-optic cables that Google installs to deliver online data instead of clunky copper lines. The sleeker technology allows Google Fiber customers to surf the Internet at a speed of one gigabit per second, up to 100 times faster than existing broadband services. Google Fiber boasts that its service can download an entire movie in less than two minutes.
The plans to move into so many other cities are the clearest sign yet that Google, already the Internet's most powerful Internet company, intends to become a bigger player in providing access to the Internet, too. Launched as an experimental project in 2010, Google Fiber so far is only available in Kansas City, Kan.; Kansas City, Mo. and Provo, Utah. It is coming to Austin, Texas later this year.
As it enters more markets, Google is hoping the competition will prod existing Internet service providers such as Comcast, Verizon Communications and Dallas-based AT&T Inc. to upgrade their networks so they can run at faster speeds. Google figures it would still benefit in that scenario if the improvements to rival networks spur more Web surfing.
But four of the largest U.S. metropolitan areas — New York, Los Angeles, Chicago and Philadelphia — are not on Google's list. Those are among the many U.S. markets where either Comcast Corp. or Time Warner Cable Inc. has emerged as a leading provider of high-speed Internet service. Comcast last week announced plans to buy Time Warner Cable for $45 billion in a deal already facing resistance from consumer rights groups worried that the combination will drive up prices for broadband and cable TV.
Prices for Google Fiber are comparable or below what most households already pay. For example, in the two Kansas City markets, Google Fiber charges about $70 per month for just high-speed Internet service. A package that bundles the Internet service with more than 100 high-definition television channels costs about $120 per month.
Google's ownership of some the Internet's most lucrative advertising networks and heavily trafficked services such its YouTube video site gives the company a powerful incentive to make it more affordable and enjoyable to spend time online. Google CEO Larry Page is hoping the company can make more money from ads and other services if faster connections and a proliferation of computing devices can make the Internet even more addictive than it already is for tens of millions of people.
"People do more of what they love on the Web when the speeds are fast and they walk away when things are slow," said Kevin Lo, general manager of Google Fiber.
Although Google believes it can make more money over the long run if Internet speeds are faster, its decision to build ultra-fast access networks has unnerved some investors who worry about how much money all the projects will cost. Lo declined to estimate how much Google would have to spend to wire all 34 cities on its wish list, but said the cost of fiber optic has been steadily declining.
Google Inc.'s blueprint for building more fiber-optic networks is tentative because the company still needs to work out logistics over issues such as construction and traffic with local government leaders.
An update on which cities will actually get Google Fiber is supposed to be provided later this year. It could then take another year or two before the service is available in the selected cities.
If Google realizes its goal, the company will provide high-speed Internet service in these additional cities: Phoenix; Scottsdale, Ariz.; Tempe, Ariz.; San Jose, Calif.; Santa Clara, Calif.; Sunnyvale, Calif.; its hometown of Mountain View, Calif.; Palo Alto, Calif.; Atlanta; Avondale Estates, Ga.; Brookhaven, Ga.; College Park, Ga.; Decatur, Ga.; East Point, Ga.; Hapeville, Ga.; Sandy Springs, Ga.; Smyrna, Ga.; Nashville, Tenn.; Charlotte, N.C.; Carrboro, Cary, N.C.; Chapel Hill, N.C.; Durham, N.C.; Garner, N.C.; Morrisville, N.C.; Raleigh, N.C.; Portland, Ore.; Beaverton, Ore.; Hillsboro, Ore.; Gresham, Ore.' Lake Oswego, Ore; Tigard, Ore.; San Antonio; and Salt Lake City.
Google can easily afford the investment. The company ended last year with $59 billion in cash. The company's stock dipped $8.54 to close Wednesday at $1,202.34.