Where do you get your Internet from? I get mine from Comcast Corporation (NASDAQ:CMCSA), and I’m sure a lot of you do too. Comcast obviously isn’t the only Internet fish swimming out there in the sea though. Some people out there (the lucky ones) live in an area where AT&T’s U-Verse or Verizon (NYSE:VZ)’s FiOS can reach their homes. Then there are the uber lucky who get their Internet from Google Inc (NASDAQ:GOOG)’s new fiber service.
Obviously these four aren’t the only companies currently playing around in the Internet space, but they are some of the biggest. The question we have to answer is, do these companies make money from their Internet services? The answer, you bet your bottom dollar they do!
The problem arises when you see that Comcast Corporation (NASDAQ:CMCSA) really isn’t investing in expanding Internet infrastructure. We’re, for the most part, stuck on the same speeds and, in some instances, paying more now than we did for Internet three years ago. Comcast Corporation (NASDAQ:CMCSA) has implemented caps and throttling off Internet services in order to make an extra couple of dollars per account. That money isn’t going to any kind of build out.
The Incoming Competitors
So, while Comcast Corporation (NASDAQ:CMCSA) is busy growing and expanding their network at a snail’s pace, they’re being caught up by the likes of AT&T, Verizon and newcomer Google. Each one of these services has its own merits over Comcast, and each one, at some point in the future, could challenge the cable companies to be King of the Internets!
Verizon FiOS could have been the Internet competitor that people were looking for. The service has unfortunately also stopped its build out. I have spoken to people who use the service, and they are actually quite pleased with it. Their smallest Internet bundle comes with 15/5 speeds; that’s 15 Mbits down and five up, one of Comcast’s premium package speeds.
Google Inc (NASDAQ:GOOG) is the company that is bringing the real competition and the real fear to both the cable companies and others that provide Internet services to their customers. Kansas City is the only place that you can currently experience Google Fiber, and there has so far been no announcement as to when the service will expand to other locales. For $300 the service will give you free Internet for life. If you’d prefer to get the Gbit Internet service that Google is offering then you’ll be paying $70 per month ($120 with TV/DVR service with free Nexus tablet and other hardware).
Obstacles
The major obstacle for services like Verizon FiOS and Google Fiber has to be the cost. Comcast and Time Warner have established bases from which to work with their tiny year-by-year service increments, but Google and Verizon had to start afresh.
It has been estimated that each home accepting Google’s Fiber will cost around $6,000 to $8,000 to get going–that’s no small investment. With the TV service included, and at the top rate, it would take Google five and a half years before they start seeing a profit from a house, that’s a big risk to be taking.
Bottom Line
Google Inc (NASDAQ:GOOG) will likely continue on with their Fiber service. It won’t spread across the country quick, but as time moves on and infrastructure grows then I’d expect to see the expansion rates increase, especially if costs go down.
With Google expanding, Verizon may see the chance to help out with fiber build out, and the two could end up with a solid partnership, never say never.
An expansion of fiber based Internet to the masses could leave Comcast without a leg to stand on when it comes to selling Internet. This company has to keep moving at a pace that keeps both Google and Verizon at least a couple of steps back over the long haul. The Internet is here to stay, and the cable companies should start treating it as such or they’ll be left behind like AOL once was.
The article Cable Has to Keep up With Fiber or Face the Consequences originally appeared on Fool.com and is written by Ash Anderson.
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