Google Fiber a Godsend for Comcast

NEW YORK (TheStreet) -- Google's (GOOG) plan to expand its local fiber Internet services could be great news for Comcast (CMCSA) because it may improve Comcast's standing with federal regulators who are looking at its proposed acquisition of Time Warner Cable (TWC) and with state regulators who want fairness for customers.

On the federal level, Comcast is facing a skeptical to hostile reception as it tries to steer its merger past the Department of Justice and the Federal Communications Commission. Democrats are mostly lining up against it, while Republicans are mostly lining up in support.

At issue is not just that Comcast would increase its customer count from 22 million to 33 million, but that it and Time Warner Cable are the largest and third largest Internet service providers in the U.S., with a combined 39% of the local access market, according to Leichtman Research. 

Google's plan to enter nine new markets is not a direct threat to that market dominance. Patrick Lucey of New America Foundation, a nonpartisan think tank, notes that after the merger Comcast cable would pass 80 million homes and Google 3.5 million. 

But Google has a market capitalization of over $400 billion, compared with a combined $174 billion for Comcast and Time Warner Cable. In Washington, such comparisons matter.

Google's potential power also matters in state capitols, where phone and cable lobbyists have always been important.

To these regulators, Google's plan may look like cherry-picking, a refusal to accept the costs of universal service that cable operators accepted when they took their franchises decades ago and that phone companies have accepted for more than 100 years.

In the Atlanta area, for instance, Google plans to serve only eight suburban towns and the city of Atlanta, the hub of the region's fiber capacity. Google has similar plans around San Jose; Raleigh-Durham, N.C.; Portland, Ore.; and Phoenix. In all these cases, the company is planning to serve only central cities and close-in suburbs. So Google is not a market threat, but it is the political counterweight Comcast can use to win its arguments for its merger and its arguments against new net-neutrality rules.

If you liked this article you might like

Why Alex Rodriguez Is Investing in Billionaires Warren Buffett and Jeff Bezos

Former NY Yankees Slugger Alex Rodriguez Reveals One Juicy Investment Tip

Why I Love Apple, Alphabet, Nvidia and These Other Stocks for September

Have Amazon, Google, Apple and Sony Flooded the Smart Speaker Market?