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posted by LaminatorX on Friday May 09 2014, @07:15AM   Printer-friendly
from the Telecom-Laxative dept.

Marguerite Reardon writes at Cnet that within a week of Google's declaration last spring that it planned to build a fiber network in the city of Austin, AT&T announced its own Austin fiber network and in less than a year's time, AT&T and local cable operator Grande Communications have beaten Google to market with their own ultra-high speed services using newly built fiber networks. AT&T maintains it has been planning this fiber upgrade for a long time, and that Google's announcement didn't affect the timing of its network but Rondella Hawkins, the telecommunications and regulatory affairs officer for the city of Austin, said she had never heard about AT&T's plans before Google's news came out. Hawkins was part of the original committee that put together Austin's application to become the first Google Fiber city. "Our application for Google would have been a good tip-off to the incumbents that we were eager as a community to get fiber built," says Hawkins. "But we never heard from them. Until Google announced that it was going to deploy a fiber network in Austin, I was unaware of AT&T's plans to roll out gigabit fiber to the home." Grande Communications' CEO Matt Murphy admits that without Google in the market, his company wouldn't have moved so aggressively on offering gigabit speeds. It also wouldn't be offering its service at the modest price of $65 a month, considering that the average broadband download speed sold in the US is between 20Mbps and 25Mbps for about $45 to $50 a month.

It's not surprising, then, that in every city in AT&T's 22-state footprint where Google is considering deploying fiber, AT&T also plans to bring GigaPower. That's a total of 14 markets, including Austin, the Triangle region of North Carolina, and Atlanta, home to AT&T's mobility division. While AT&T refuses to acknowledge that its gigabit fiber plans are answering the competitive challenge posed by Google Fiber, others say that Kansas City may have been a wake-up call. "I think all the providers have learned some valuable lessons from Google's Kansas City deployment," says Julie Huls, president and CEO of the Austin Technology Council. "What Google did instead was say, 'We're going to build you a Lamborghini, but price it at the same price as a Camry,'" says Blair Levin. "And that's what's so disruptive about it."

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  • (Score: 3, Informative) by Anonymous Coward on Friday May 09 2014, @12:00PM

    by Anonymous Coward on Friday May 09 2014, @12:00PM (#41210)

    This is an excellent example of how having true competition in a market actually works and benefits consumers.

    And no, choosing between only Comcast and Verizon does not count as "true competition".

    Way back when, in a time long forgotten, we had dial up access to "online services". These were isolated stove-pipes, and they charged by the minute to use their services. (for those who forget, some of the names were Compuserve, The Source, Prodogy, AOL, etc.)

    Then, later, "the internet" became known to the masses, and we had literally hundreds of dial-up ISP's competing for your patronage. Very quickly the costs of accessing "the internet" switched from "pay by the minute" to flat rate for a month. And just as quickly, the cost of "1 month" dropped until it was only marginally more than the base costs of providing the service (i.e., the electric power/salaries consumed) plus a tiny profit.

    Why? Because of competition. When Joe's ISP offered 1 month for 29.95, what would happen is Frank's ISP would offer 1 month for 27.54, then Jane's ISP would offer 26.42, and quickly it became a race to the marginal cost. And like everything digital, the marginal cost of moving a bit is quite near zero (i.e., just the wattage consumed by the equipment).

    Then later, in a time not quite so long ago, but also largely forgotten, we had "broadband" ISP's via DSL over existing copper phone lines.

    This market produced the same results as the dialup market. Multiple ISP's, all vying for your patrionage. And just the same as with dialup, prices began to fall to the marginal service provision level plus a small profit on top, and performance rose up to the maximum the tech. was able to achieve on the copper at the time.

    Why was this possible? Because the copper phone line infrastructure had been built and paid for many times over (i.e., the capitol investment had already been recovered). And because the copper phone lines were regulated such that alternate DSL providers could all gain access to the copper for the same bulk wholesale cost.

    Then the current oligarchies convinced the FCC to not regulate their new, faster, "fiber" networks. So now, they no longer have to sell access to their networks to others for a fair, wholesale, cost. They get to be the only game in town on their fiber networks.

    When you have no competition, you get to charge whatever you like, and folks choice becomes one of:
        1) pay the toll
        2) don't pay the toll (and do without).

    That is not the same as having Fred offer the same for $5 less than Jane, and Joe offer for $10 less than Fred, and the Eloise offer it for $20 less than Fred.

    When Google arrives, and builds out a fiber net, suddenly the fat-cats see another instance of "Fred is offering internet for $10 less than we are, all our customers are switching away".

    This is why they react by doing the same. True competition (something they have not felt for a very long time) finally arrives again. And they react in kind by demonstrating that they were just collecting obscene profits because you had two choices: pay up or do without.

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  • (Score: 4, Insightful) by Blackmoore on Friday May 09 2014, @02:20PM

    by Blackmoore (57) on Friday May 09 2014, @02:20PM (#41256) Journal

    but at&t has in truth done NOTHING here. this is an announcement, like others they have made "promising" that high speed fiber is "going to be deployed soon" - and they have not delivered on this. it is a ploy, a lie. and it should no longer be tolerated.

    Google should move forward. None of the monopolies will do more than talk until someone else is taking the cash cow away from them.