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Austin to Get Google Fiber Service

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Reportedly, search giant Google Inc. (GOOG) is all set to expand its high-speed Internet service through its fiber-optic network to Austin, Texas. The official announcement is likely to be made next week.

Google launched its high speed Internet service named Google Fiber in Kansas City, Mo in Sep 2012 and recently expanded the service to Olathe, a Kansas City suburb. 

Google provides the service under three plans. In the first one, the residents pay $70.0 a month solely for the Internet connection. The second plan comes at a price of $120.0 and offers TV service, a digital video recorder and a set-top box along with a tablet-computer remote control. The third option offers seven years of free Internet access at slower speeds for which the customer needs to pay a one-time installation fee of $300.           

Google is banking on its speed to attract users. This can open another growth avenue for the company as speed has been the limiting factor for increased consumption of video and other data-heavy activities through the Internet. Whether Google can make it commercially viable is still not clear because others (Verizon and AT&T) have previously tried and failed.  However, if it is successful, Google TV could catch on fast.

In the fourth quarter of fiscal 2012, Google’s gross revenue (including TAC) touched a record $14.4 billion, representing sequential and year-over-year increases of 2.3% and 36.2%, respectively. Excluding the $1.5 billion contribution from Motorola, revenues were up 21.9% from the year-ago quarter.

Google has a Zacks Rank #3 (Hold). Other stocks that have been performing well and are worth considering include Intersil Corp. (ISIL), KLA-Tencor (KLAC), and Qualcomm Inc. (QCOM), all carrying a Zacks Rank #2 (Buy).

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