Austin #1 After All- First City to Get Two, 1 Gigabit Networks (Google + AT&T)

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It didn't take long for the good news to get better, but just hours after it was announced that Google Fiber would be coming to Austin, AT&T jumped on the bandwagon stating that it, too, would be investing in its Austin network to compete with Google's 1 Gigabit connection speeds.

“Today, AT&T announced that in conjunction with its previously announced Project VIP expansion of broadband access, it is prepared to build an advanced fiber optic infrastructure in Austin, Texas, capable of delivering speeds up to 1 gigabit per second.  AT&T's expanded fiber plans in Austin anticipate it will be granted the same terms and conditions as Google on issues such as geographic scope of offerings, rights of way, permitting, state licenses and any investment incentives.”

Unlike the Google announcement which was closely orchestrated with the city, AT&T's press release seems to be the extent of their effort.

Reuters: Austin City spokesman Doug Matthews had no immediate comment on AT&T's statement, referring calls to Rondella Hawkins, the director of the city's telecommunications and regulatory group, who was not immediately available.

As explained in the article, this may be less AT&T trying to get in on a hot new market and more protection of their own existing empire. City officials should take note of the economics at play here and make sure that Austinites don't end up being the loser in a corporate grudge match.

Matthew Yglesias explains, emphasis mine.

I think the right spirit in which to read this announcement is as a warning to Google-stay out of our turf.

One of the main reasons there's so little competition in the wired telecommunications market is precisely this dynamic. If one company comes in and builds a state-of-the-art network it bears large costs but gets to earn monopoly profits. If a second company comes in and builds a second state-of-the-art network, then both companies have large costs and both only get to charge the competitive price. At the monopoly price, the investment is worth making. At the competitive price, the investment isn't worth making. Normally the upshot is that you don't get the “second company”. But it's also possible to pursue a pure spoiler strategy. AT&T won't make a profit building a copycat gigabit fiber network in Austin, but it may be able to ensure that Google doesn't make a profit either. That can work to deter Google from entering any other markets. At a minimum, it might deter them from entering any AT&T markets and inspire them to look at cities where people rely on Comcast or Verizon for broadband services.

Food for thought. But for now, we can enjoy how Austin has turned being #2 on a list into being #1 on another.  


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Former Publisher & Owner of the Burnt Orange Report. Political Thinker, Digital Explorer, and Time Traveler.


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