Will This Broadband War Take a Toll on AT&T Stock?


Sixth Street in Austin, Texas. Photo credit: Larry D. Moore/Wikimedia Commons.

AT&T and Google will be at war soon. Their battlefield: Austin, Texas.

Both companies plan to serve residents with a heaping helping of ultrafast broadband Internet over fiber. AT&T says its rollout will begin in December with 300 Mbps service to some in the area. They'll also be able to sign up for TV service, mimicking the basic elements of Google's competing suite.

We've seen this coming for a while. Google first announced plans to lay fiber in Austin in April. AT&T announced its strategy shortly thereafter and is already in position to light up its U-verse service over fiber first. Should investors expect this and similar installations to drive profits?

They have so far. U-verse revenue grew 38% last year. Subscriptions are up from 7.4 million last October to 9.4 million as of last quarter. It's a good bet AT&T passed the 10 million mark sometime before the end of the third quarter. Adding new fiber in a tech-savvy city like Austin should only make AT&T's U-verse story more appealing.

Meanwhile, I'm expecting Google to stick to its plan to introduce fiber in the middle of next year. Why rush? The company has better alternatives for increasing its revenue opportunity, such as introducing new Android and Chrome software or marketing better Chromebooks, such as the Hewlett-Packard 11-inch introduced this week. Google can continue to do all that regardless of how fast AT&T gets its Austin fiber network up and running.

Or in simpler terms: AT&T needs this deployment more than Google does. Expect the carrier to make good. Think I'm wrong? Which would you rather buy fiber service from? Leave your comments in the space below.

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The article Will This Broadband War Take a Toll on AT&T Stock? originally appeared on Fool.com.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Google at the time of publication. Check out Tim's Web home and portfolio holdings, or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends and owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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