Yesterday, I ended my look at Google Fiber's plans for Austin with the question of how the incumbents might respond to this evolution beyond the demo. Apparently, AT&T (NYSE:T, news, filings) was way ahead of me, because they stepped up and unveiled their own Gigabit fiber buildout plan for Austin. This sets up quite an interesting dynamic, not so different from that popular poker variant, Texas Hold'em.
This is obviously no coincidence, AT&T was ready for Google's announcement and is trying to make several points:
- No more playing favorites! This reflects the simple fact that incumbent carriers generally see their main competition as the regulators, while competitive carriers are best seen (by regulators) and not heard (by customers). ILECs and Cables have long made the case that Google manipulated KC into giving them special treatment, and want the same. And AT&T plans to either get it, or shed light on the unfairness of not getting it.
- Let's see how your business model survives direct competition! Whether Google Fiber works economically in Kansas City or not, in Austin AT&T is going to make them work for it by facing a well-funded competitor who just might make it *not* worth it to take this to more AT&T markets. How quickly will those fiberhoods fill up in Austin when AT&T's customers have the option to upgrade directly.
- We can do this all day! According to the PR, "This expanded investment is not expected to materially alter AT&T’s anticipated 2013 capital expenditures." That's financial speak for 'This is pocket change for us, pick another city we dare you'. The fact that they thought the rate of return on FTTH sucked before doesn't mean they can't absorb it for a turf war.
But on the other hand, both sides are at a stage where they could be bluffing. Google's entire purpose still could be to provoke such a response as this, and having done so they could take a step back and let AT&T do some FTTH they wouldn't otherwise have done. And AT&T hasn't actually committed any money to the project yet, so if they don't like the reception this gets from local government, utilities, and regulators - they can just use that fact as fodder for public complaints against special treatment.
They each have different cards. Google has the edge in public opinion and is seen as the champion of Gigabit fiber. AT&T has more infrastructure and personnel already in place. But they don't get to pick the cards they get for the next round, Austin does.
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