Analyst: Google Inc. Slower Than Expected With Fiber

Google Inc. GOOGL plans to build fiber networks are proceeding slower than expected in the face of doubts about the company's use of capital, an analyst said Wednesday. The Mountain View, California, search giant on Tuesday unveiled plans to expand the service to four metropolitan areas, up from three currently. The four new areas include Atlanta, Charlotte, Nashville, and Raleigh-Durham. The service offers high-speed broadband plus a 150-channel video bundle for $120 per month. It also offers free basic Internet service for a $300 construction fee. With Google slated to post fourth-quarter earnings Thursday, Morgan Stanley's Benjamin Swinburne said investors may soon hear more about the company's plans for fiber. "Google bears aren't convinced it's a good use of capital," Swinburne said. The analyst had expected Google was going to announce nine to cities for its fiber project by the end of 2014. "So the next phase of construction may be less than expected," Swinburne said. Google said Tuesday, however, that it's also continuing to explore bringing fiber to five additional metro areas, and will have updates on these potential projects later this year. Cities on the potentials list: Phoenix, Portland, Salt Lake City, San Antonio and San Jose. The company launched its "experimental" fiber project in 2010 and currently offers the service in Provo, Utah, Austin Texas, and Kansas City, Missouri. In Austin and Kansas City, construction has been slower than expected. But where the service is up and running, "penetration rates have grown rapidly," Swinburne said. Google changed hands recently at $519.45 down $1.74.