The fiber wars — competition that could make Kansas City a rare American market offering home customers mega-fast broadband sold by dueling companies — are fully underway.
AT&T announced at midnight Sunday that it’s ready to sell Internet service over skinny fiberoptic wires with a hefty capacity to move data directly to homes and small businesses in parts of Kansas City, Leawood, Lenexa, Olathe and Overland Park. The company said it plans to expand later to Independence and Shawnee.
That news marks a clear challenge to Google Fiber, which is still wiring the market with its own super-fast Internet service.
AT&T said its fiberoptic cables already connect to the outside of many homes. Customers can begin signing up in select neighborhoods immediately for service to be installed in the coming weeks and months.
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The company clearly aimed its prices to compete with Google Fiber. Internet connections of up to 1 gigabit per second — nearly 100 times faster than available in most U.S. homes — will run $70 a month. Teamed with a basic TV package, service will cost $120 a month.
Both packages match exactly Google’s speeds and rates, although AT&T customers will get free HBO for the first three years. In addition, AT&T offers Internet-based phone service for another $30 a month. It’s locking prices for three years, although customers are obligated to only one-year contracts.
Google Fiber offers no phone service. On the other hand, Google packages include a terrabyte of remote, or cloud, data storage. It also allows customers to record up to eight shows at a time, while AT&T’s service would allow recording of five programs at once. Google requires TV customers to sign two-year contracts.
Time Warner Cable remains the dominant seller of Internet service and TV packages in Kansas City and has yet to match the speeds made possible when fiberoptic cables reach directly into a home. But since Google entered the market, Time Warner has ramped up speeds without raising rates.
The launch in the Kansas City area of what AT&T calls GigaPower makes it the second major player, following the lead of Google Fiber a few years earlier, promising consumers the ability to download high-definition movies in half-minutes and stream more video on demand than they can possibly watch.
“We’re very pleased to be in the ballgame,” Mike Scott, the AT&T president for Kansas, said in an interview. “It’s long overdue.”
The gigabit-per-second offering from AT&T also pairs light-speed broadband with popular channels missing from Google Fiber’s lineup, notably AMC with its zombie breakout “The Walking Dead” and the artsy fare of the Sundance and IFC networks.
AT&T had said last spring that it might expand its GigaPower service to Kansas City. And when Google backed out of an agreement to wire Leawood — the city refused to waive rules against hanging new lines on its existing utility poles — AT&T stepped into the void.
But the Texas-based telecommunications giant also hinted nationally that it would stop its rollout of dramatically faster Internet hook-ups if the Obama administration pursued more regulation of such services.
AT&T CEO Randall Stephenson last fall warned that “we can’t go out and invest that kind of money deploying fiber to 100 cities not knowing under what rules those investments will be governed.… We think it is prudent to just pause and make sure we have line of sight and understanding as to what those rules would look like.”
That hesitancy to expand the GigaPower service applies to markets where AT&T has yet to announce plans, not places such as Kansas City where work has been underway since last spring.
Scott said AT&T does not plan to offer the ultra-fast Internet lines to every home in the market. Rather, he said the company would calculate where demand is strongest and the investment in stringing new cables promised a decent return.
“We’ll look at the competitive environment … and where the investment makes it best to deploy,” the AT&T official said.
The company has taken the same approach with its U-verse service, sold to more than 100,000 customers in the Kansas City market, which delivers TV packages and more ordinary Internet speeds.
Likewise, Google has offered service only in neighborhoods where enough potential customers signed up in advance. In time-limited periods Google billed as “rallies” that doubled as a marketing effort, bandwidth-hungry customers were encouraged to get their neighbors to sign up so their areas could meet thresholds set by the company.
Predictably, the more prosperous a neighborhood, the more likely it was to be sold service from Google Fiber. AT&T won’t hold rallies, Scott said. But its internal calculations will likely yield the same result.
That has prompted some critics to complain about an increasing “digital divide” that separates the poor from an ever-more-wired world.
Still, the AT&T news further establishes Kansas City as a place where bandwidth is uncommonly plentiful. Measured on a bit-by-byte basis, it’s also dirt cheap here.
Industry analysts have debated for years whether Google Fiber was intended to make a profit or merely to prod other companies to invest in faster Internet speeds. The first remains an open question. But at least in Kansas City, the competition has responded.
It has also changed the way local government plays with the companies. Building a network involves tearing up streets and lawns, crossing public easements and a nearly endless need for building permits.
Google came to Kansas City with the lure of cutting-edge technology — industrial-strength connections made available to living rooms and home offices. But it insisted that much of the usual red tape that could slow and push up the cost of a project of such ambitions be stripped away. One city after the next agreed.
When they bent their rules for Google, those cities became obligated to do the same for its competition.
“The cities we have worked with have been very good,” Scott said. “They’ve given us no special treatment, only what other providers have received.”
AT&T already is selling its GigaPower product in Austin, Texas, the second significant market where Google is building the service it debuted in Kansas City, Kan., in late 2012.
But there’s a big difference in what each faced on construction. Google had to build its network from scratch — meaning all of its work benefited from streamlined permitting and waived rules from cities. AT&T built the bulk of its network under more onerous regulations.
Google Fiber’s service has received mostly warm reviews from customers. But it has been slow going. For instance, the California-based company had once said it would finish home installations in Kansas City last year. Instead, the latest word from Google is that work will wrap up late this year.
It’s unclear whether AT&T will leapfrog Google Fiber’s rollout.