Here's How Comcast Is Responding to Google Fiber

By Markets Fool.com

Comcast, at least on the cable and broadband side of its business, has never been all that good at handling competition.

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That makes sense for a company that, for a very long time, had monopolies or near-monopolies in the markets it offered service in. Recently, that has changed a bit with consumers having options for pay-TV and Internet service from satellite companies in the case of television, and telcos operating in both spaces. In nearly all situations on the broadband side, though, Comcast still had a better product than telephone company DSL.

So, for most consumers who want an Internet connection in Comcast markets, there has either been no choice, or the option to pick generally inferior telco DSL service. That made it easy for the company to continue to act like a monopoly, because in many ways, it has been.

However, that is changing in markets where Alphabet's Google FIber service has entered the fray to compete with Comcast's new Xfinity gigabit service.

On to Atlanta
While Google Fiber has only been rolled out in select cities, it is offered in Atlanta, where Comcast has chosen to introduce its owngigabit-speed broadband service. That makes the city a sort of battleground where the cable and Internet giant is showing off how it intends to compete in a market where it has a worthy rival.

In this case, Comcast has a three-pronged plan of attack. First, the company haslauncheda marketing campaign backed by a web page touting its service's superiority. That page shows the Xfinity product as offering 725 Mbps in-home Wi-Fi speed while claiming that Google FIber only has 30 Mbps. It also claims that Comcast's service offers the "most Wi-Fi coverage for all rooms," and that it has "unmatched online security."

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The second piece of the puzzle involves Comcast's pricing. The company is offering its new premium high-speed service for $70 a month without data caps if customers sign a three-year contract with an early termination fee of $350, which drops on a monthly scale, Ars Technica reported. Customers who don't want to sign a contract will pay $139.95 a month for service with a 300GB-per-month data cap (though there is a $35 a month option for unlimited service).

As for the third piece, well, let's call it grassroots, as the cable company has been distributing flyers in Atlanta urging people not to "fall for the hype" of Google Fiber.

How does Google's offer compare?
It's easy to see why Comcast wants to lock people up for three years, but it's hard to see how its offer will be appealing given Google's pricing. In Atlanta, Fiber's price for gigabit service is a straight $70 a month with a $100 installation fee waived with a one-year commitment.

Google is serving condos and apartments first. Image source: Google.

Even if everything Comcast claims about its service's advantages over its rival is true, it's hard to picture anyone being willing to sign a three-year contract in order to pay the same price he or she can get on a one-year deal from Google. Effectively, that leaves Comcast with a plan to compete that revolves around attempting to convince people that the competitive offering is vastly inferior.

That seems like a bad play, here, because Comcast is not competing against telcos that may not have the best reputations. In this case, it's coming up against a brand with a reputation for both innovation and integrity.

Fighting Google using higher prices and scare tactics won't work, and it could doom Comcast's efforts to bring in a customer base for what appears to be a promising product.

The article Here's How Comcast Is Responding to Google Fiber originally appeared on Fool.com.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Daniel Kline has no position in any stocks mentioned. He wrote this on St. Patrick's Day and wonders why neither Cookie O'Puss nor Uncle O'Grimacey appears in ads anymore. The Motley Fool owns shares of and recommends Alphabet (A and 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.