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AT&T Eyes High-Speed Fiber Plan

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AT&T Inc.(T) – the second largest telecom operator in the U.S. just after Verizon Communication Inc. (VZ) – recently announced its plan to build a high-speed fiber optic infrastructure in Austin, Texas.

Implementing such a technology across the region will not only boost its fiber network speed to 1 gigabit per second but will also challenge Google Inc.’s (GOOG) threat of deploying fiber Internet service across the same footprint.

Google started to enroll subscribers residing in Kansas City for the fiber Internet and TV service starting at $120 per month. So, it is highly anticipated that AT&T will keep its price quite attractive as compared to Google.

Google Fiber service will offer 1 GB data plan to customers coupled with 1 TB Google drive storage capacity and 2 TB TV recording service.  Google’s fiber service will start in Austin from the middle of fiscal 2014. However, it is not certain when AT&T will start its high-speed fiber service.

AT&T’s Wireline revenues dipped 0.5% year over year to $14.9 billion. AT&T's total video subscribers, which include U-verse TV and bundled satellite customers, touched 8.0 million at the end of the fourth quarter of 2012. Total U-verse TV subscribers reached 4.5 million with the net addition of 192,000 customers.

Hence, we believe that deployment of such a high-speed fiber optic cable technology will not only trigger subscriber growth for AT&T’s Wireline segment but at the same time will also drive top-line growth, going forward.

Currently, AT&T Inc. has a Zacks Rank #2 (Buy). 

Another telecom company, Rogers Communications Inc. (RCI) belonging to the same sector also has a Zacks Rank #2 (Buy).

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