Google Fiber to launch in Austin, Texas

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By Julianne Pepitone

NEW YORK (CNNMoney) — The next city to get Google’s ultra-high-speed Fiber network is Austin, Texas.

Google Fiber offers Internet speeds of up to 1 gigabit per second, which Google says is 100 times faster than the average American Internet user’s service. Google also offers a Fiber TV service that lets customers watch all shows in HD, record up to eight shows at once and store up to 500 hours of HD video in the cloud. Customers can watch across several devices, including cell phones and PCs.

Austin is the third city to get access to Fiber, after Google launched the service last summer in select neighborhoods in Kansas City, Kans, and Kansas City, Mo. The former was chosen in 2011, after more than 1,100 cities applied to get Fiber first.

“It’s a resource that could help make our city even more innovative and make our city even stronger,” said Austin Mayor Lee Leffingwell.

The Fiber Internet and TV package costs $120 a month with a two-year contract, and those customers can control multiple televisions using the included Google Nexus 7 tablet. Google also offers an Internet-only option for $70 a month and a free Internet service at “today’s average speeds.” The search giant is also providing the service for free to local schools, community centers, government buildings and libraries.

The speedy service is an exciting option for customers, but building out a new network costs a lot of money, from laying down the network infrastructure to actually connecting individual homes. Analysts aren’t convinced it’s a smart business move for Google.

In a note to clients on Monday, Bernstein Research analyst Carlos Kirjner poured cold water on hopes of a nationwide Fiber rollout.

“We remain skeptical that Google will find a scalable and economically feasible model to extend its build out to a large portion of the U.S.,” Kirjner wrote, citing “substantial” costs. He’s also concerned about regulatory issues and stiff competition from existing providers like Verizon, Comcast and AT&T.

Kirjner estimates the two Kansas City rollouts will surpass 149,000 homes, and he says it will cost about $84 million just to lay the infrastructure for those customers. He estimates it will cost Google $464 to connect each Internet-only customer, and $794 for a TV and Internet home. Connection costs could be similar or even a bit lower in Austin, whose population density is higher than Kansas City.

Fiber-optic installation often involves ripping up a customer’s lawn. Verizon is not planning to expand its FiOS fiber-optic network, and AT&T recently pledged to bring fiber to its neighborhood networking nodes — but not to homes.

Still, Google has made it clear it plans to expand the service. According to the Fiber Cities website, Google will roll out Fiber to handful of cities around the initial launch site: Missouri’s Kansas City North and South, and Kansas’ Westwood, Westwood Hills and Mission Woods. The timeline is unclear, but all five cities are listed as “coming next.”

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