Google Inc. (GOOG) is initiating talks with nine U.S. metropolitan areas about bringing its high-speed broadband Internet service to consumers, as the search provider steps up competition with cable and phone companies.
The potential regions include 34 cities, from Portland, Oregon, and San Jose, California, on the West Coast to eastern U.S. cities Atlanta and Charlotte, North Carolina, Google said today in a blog post. The company is working with city leaders to determine the best locations for the fiber lines and will provide updates about the areas it chooses by year end.
Google, based in Mountain View, California, is challenging companies such as Comcast Corp. (CMCSA) and AT&T Inc. by providing Internet and television service and promoting network speeds that can be 100 times faster than current choices. Fiber projects are already underway in Kansas City, Kansas, Austin, Texas, and Provo, Utah.
“Google is taking the long view,” wrote Carlos Kirjner, an analyst at Sanford C. Bernstein & Co., in a note to clients. “In five or more years, it could turn out to be a significant, profitable business for Google and headwind for incumbents.”
Cable company shares fell after the announcement. Comcast dropped 3.7 percent to $51.57 at the close in New York, and Time Warner Cable Inc. (TWC) dropped 2.8 percent to $141. Comcast agreed last week to buy Time Warner Cable for $45.2 billion in stock.
When reviewing potential markets, Google said it will consider characteristics such as topography, housing density and the condition of infrastructure. Participating cities will need to provide maps of water, gas and electricity lines.
“People are hungrier than ever for faster Internet, and as a result, cities across America are making speed a priority,” Google said.
Google shares fell less than 1 percent to $1,202.34 today after reaching a record yesterday. The stock has climbed 49 percent in the past year, double Comcast’s advance.
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