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Is Dallas the Next Destination for Alphabet (GOOGL) Fiber?

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Reportedly, Alphabet (GOOGL - Free Report) owned Google is planning to expand its high-speed Internet service through its fiber-optic network to its next city, Dallas, TX.

For now, Google Fiber will work with officials in Dallas to obtain permits needed to take its Internet service to the city. Also, it will explore the feasibility of building infrastructure required to connect Dallas to the network.

This news comes on the heels of the update that Alphabet is planning to bring ultra high-speed Internet to homes through new cheaper wireless technology. Google Fiber has been testing new wireless technologies in Kansas City and plans to set up a test wireless network by the end of this year. This could be an opportunity for Google to build a nationwide network and further strengthen its foothold in the broadband Internet space.

Google Fiber

The high speed Internet service — Google Fiber — was launched in Kansas City, MO in Sep 2012. With the launch, the company intended to put pressure on major broadband providers like AT&T (T - Free Report) , Comcast and Verizon Communications (VZ - Free Report) to upgrade their networks to support higher Internet speeds.

Alphabet offers speeds of up to 1,000 Mbps (1 gigabit per second) for $70 a month — about 100 times faster than the average broadband speed available in the country — and cable service for $130 per month.

As of now, Google Fiber is operational in only a handful of cities but the company is making all efforts to spread it to other cities. Currently, in Texas, Google Fiber operates in Austin, one of the first cities to get Google Fiber and is under construction in San Antonio. Dallas would become the third Texas city to have the high-speed Internet service.

Bottom Line

The aggressive expansion plans reflect intensifying competition in the broadband space. In Dallas, Google Fiber would compete with other ultra high-speed fiber Internet providers, including this city based AT&T. Notabtly, AT&T plans to spread its super-fast Internet service to 31 metro areas and nearly double the availability of GigaPower in southern Dallas.

However, Alphabet can bank on its speed to attract users. Also, with Google Fiber’s expansion, which is comparatively faster than most existing Internet providers in the U.S., the company is pushing its peers to upgrade the Internet services or lower the prices. With the expansion of Google Fiber network, users will go online more frequently and be more likely to use the company’s other services, thereby driving revenues.

Alphabet has a Zacks Rank #3 (Hold). A better-ranked stock is Facebook sporting a Zacks Rank #1 (Strong Buy).

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