Live in These Two Cities? Then You're Paying Too Much For AT&T's Fiber Service

By Markets Fool.com


Source: AT&T.

Continue Reading Below

AT&T is busy rolling out its GigaPower fiber Internet service in more cities across the U.S., and just added Cupertino, Calif., to the list. With speeds up to 1 gigabit per second, AT&T's fiber customers are likely a happy bunch. That is, unless some of them start comparing their bills to others across the country.

Here's what you'll pay each month for AT&T's ultra-fast fiber Internet in the seven cities in which it is available:

City

Price for 1Gbps

Austin

$70

Kansas City

$70

Raleigh-Durham

$70

Winston-Salem

$70

Fort Worth

$70

Dallas

$110

Cupertino

$110

Source: AT&T and Wall Street Journal..

The Wall Street Journal recently reported that until last month, AT&T was charging $110 per month in Raleigh-Durham and Winston-Salem, and it just dropped its Dallas price from $120 to $110.

Continue Reading Below

So why does AT&T charge more in some cities, and why has it dropped the price in others? It all comes down to competition. In most of the cities with the lowest GigaPower prices -- including Austin, Kansas City, and Raleigh-Durham -- Google Fiber is either available (for just $70 per month) or coming soon. Before Google Fiber arrived, AT&T could charge higher prices, and usually did.

Matching the competition, sort of
This speaks to the impact Google Fiber is already having in the Internet marketplace, and it's not just changing how AT&T does business. Time Warner Cable and Comcast have both increased their Internet speeds in cities that offer GoogleFiber, while keeping prices the same.


Source: Google.

Though AT&T is matching Google's pricing and speed, there's one major difference between the two. AT&T charges more money (up to $29 per month) in addition to the base Internet bill if users opt out of allowing AT&T to closely track the search terms, Web pages, and other browsing data that they create. So for customers who want fast Internet speeds without overly intrusive tracking (Google tracks user behavior, but not to the same degree), then GigaPower's base $70 or $110 per month price isn't reflective of the total cost.

One problem and one opportunity
All of this demonstrates the need for more competition for ultra-fast high speed Internet. AT&T offers better services at reduced prices where Google Fiber is available, and as Google's Internet ambitions increase, hopefully that will continue.

Before Google Fiber came around, AT&T charged up to 60% more in some cities for its gigabit Internet than it does now. While it's only charging that $110 price in two cities right now, I can't imagine the company thinks this is a good long-term strategy for fiber growth. Internet service providers already offer the worst customer experience, according to Temkin Group, and charging high prices until Google arrives is a terrible strategy.

AT&T's 1Gbps speed is only offered in seven cities around the country, so it's not as if the company is financially dependent on the service. But if AT&T continues its fiber expansion, along with Google, then it will likely have to keep its GigaPower price fixed at $70 in every city, and consider backing off the additional $29 privacy charge.

AT&T is aggressively rolling out fiber options across the country. If it can get the pricing right, before Google comes to town, then it could collect huge payoffs. The U.S. lags many other developed countries in terms of Internet speed and price, and AT&T has the opportunity to become the leading provider for a market that is hungry for ultra-fast, reasonably priced Internet. That is, if Google doesn't get there first.

The article Live in These Two Cities? Then You're Paying Too Much For AT&T's Fiber Service originally appeared on Fool.com.

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Google (A shares) and Google (C shares). The Motley Fool owns shares of Google (A shares) and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.