Google to challenge Verizon, AT&T with ultra-fast broadband network

Google Inc. is planning to build high-speed fiber-optic broadband networks in the U.S. to offer Internet speeds that are more than 100 times faster than what Verizon Communications Inc. and AT&T Inc. sell today.

The company, owner of the world's most popular Web-search engine, said today it will offer the service at a "competitive price" to at least 50,000 people and potentially as many as 500,000. Google wants to use the networks for applications that consume lots of bandwidth.

Google's jump into the market may pressure AT&T, Verizon and Comcast Corp. to bolster their high-speed networks, said Mike Jude, an analyst at researcher Frost & Sullivan in Denver. The company already offers a wireless network in Mountain View, California, and is an investor in Clearwire Corp., which provides Internet access using a technology called WiMax.

Verizon's Midwest headquarters is based in Schaumburg. AT&T has operations in Hoffman Estates, Northbrook, Rolling Meadows, Warrenville and Chicago. Comcast also his its Midwest HQ in Schaumburg.

"The more competition in broadband the better, the higher the bandwidth the better," Jude said. Google's plan to offer speeds of 1 gigabit per second may prompt competitors to follow, he said. "If Google went out and started delivering a gigabit per subscriber, it would show that anybody with fiber can do the same thing."

Verizon's FiOS, AT&T's U-Verse, and Comcast's DOCSIS 3.0 services offer residential downloads no faster than 50 megabits a second, with the cheapest connections being 1 megabit or less. While the companies could offer faster speeds, they haven't done so because there hasn't been demand, said Lawrence Harris, an analyst at CL King & Associates in New York.

A 1-gigabit service could be popular with video-game players and those who want faster video, and could eventually extend into 3-D viewing, Harris said.

'Real Progress'

Google's first step is to find cities that want the service, said Minnie Ingersoll, a product manager at the Mountain View-based company. She said Google will likely identify at least one city this year. The company's engineers and outside developers will work on applications that illustrate the speed of the fiber connection, she said.

Google plans to work with companies that build fiber-optic networks, Ingersoll said. Google is probably still soliciting interest from vendors, and companies that helped with Verizon's FiOS build may be poised to benefit from the project, Harris said. Those include Alcatel-Lucent SA, BigBand Networks Inc., Tellabs Inc. and Corning Inc., he said.

"Network providers are making real progress to expand and improve high-speed Internet access, but there's still more to be done," Google said on its blog. "We don't think we have all the answers -- but through our trial, we hope to make a meaningful contribution to the shared goal of delivering faster and better Internet for everyone."

Broadband 'Testbed'

Google fell $2 to $534.45 at 4 p.m. New York time on the Nasdaq Stock Market. Comcast slid 8 cents to $15.31. AT&T fell 14 cents to $25.12 on the New York Stock Exchange, and Verizon rose 12 cents to $28.87.

Google has urged the Federal Communications Commission to find new ways to promote high-speed Internet access. FCC Chairman Julius Genachowski said today in a statement that Google's trial is a "testbed for the next generation" of Internet services.

Bob Varettoni, a spokesman for New York-based Verizon, said Google's network expansion is "another new paragraph in this exciting story." AT&T spokesman Michael Coe and Comcast spokeswoman D'Arcy Rudnay declined to comment.

"We look forward to learning more about Google's broadband experiment in the handful of trial locations they are planning," Brian Dietz, a National Cable and Telecommunications Association spokesman, said in a statement today. The cable industry will invest in and improve the speed of its networks, he said.

Clearwire Investment

Google will collect responses from communities until March 26, and will announce which areas have been chosen later this year. The company plans on building the fiber lines to the home, much like Verizon's FiOS, and will be paying for the deployment, Ingersoll said.

Verizon is investing $23 billion in its fiber-optic network. Ingersoll declined to specify how much money Google has dedicated to its venture. The company had $24.5 billion in cash and short-term investments at the end of December.

Google is expanding in the telecommunications industry in other ways. In January, the company introduced a touch-screen mobile phone called Nexus One and opened an online store to sell the handset. In 2008, Google was part of a group of companies that invested in Clearwire, founded by mobile-phone pioneer Craig McCaw.

'Grandiose' Plans

In 2008, Google pushed for spectrum being auctioned by the U.S. government to be open to any device or program.

"Google's announcement today amounts to a nationwide competition for communities to step up and make the case for what a next generation network could do for them and then show America what is possible," Massachusetts Senator John Kerry said in a statement. "I believe in the power of big broadband pipes over which people are free to innovate and deliberate and will be watching this experiment carefully."

In 2006, Google won a bid to build a free Wi-Fi network in San Francisco. The plan was put on the back burner after EarthLink Inc., which was going to build the network, backed out and city politics delayed deployment.

"Sometimes Google has a very short attention span, they have grandiose plans and then a year later everyone asks what have they done with that?" said Tero Kuittinen, an analyst at MKM Partners LP in Greenwich, Connecticut. "This announcement took everyone a bit by surprise and we don't know what's going to come of it."