AT&T gets the Googlefinger

by Steve Blum • , , , ,

I guess it’s just coincidence your suit fits too, Mr. Bond.

“Mr Bond, they have a saying in Chicago: Once is happenstance. Twice is coincidence. The third time it’s enemy action.”

AT&T is reacting to Google’s Austin announcement with the same paranoia that Auric Goldfinger eyed James Bond on their second, not-so-accidental meeting. The Texas capital is now positioned to get gigabit service from both companies.

It’s Google’s second venture into fiber to the home service, which could mean they just want to check results from what is still an experiment in Kansas City. Or they’ve decided it’s time to disrupt the hell out of the telecoms industry.

I’ve been analysing and projecting subscriber ramps for more than twenty years, and I wouldn’t want to test my modeling against Google’s algorithms. It could be the Kansas City take rates alone justify the money invested. But I don’t think so. Not yet.

Google’s core business would greatly benefit from nationwide FTTH service in the U.S. The more bandwidth that’s available to homes and businesses, the more digital services they can deliver and the more advertising they can sell. Those are high margin businesses that Google dominates. Broadband service, on the other hand, is not.

Goading AT&T (and Verizon and Comcast and the rest) into pulling more residential and small business fiber still has to be Plan A for Google, and judging from AT&T’s response it’s working. There’s no indication that the Kansas City system is delivering a sufficient return on investment – on its own – to support a national roll out.

Today’s announcement, though, means that it might be a makeable business case. AT&T’s “me too” announcement says they think Google’s Plan B – enemy action – is a big step closer.