Grande Communications Launches Gigabit Service in Austin, Texas in February 2014

Grande Communications plans to launch gigabit access service in parts of Austin, Texas by Feb. 18, 2014, beating both Google Fiber and AT&T in  launching 1 Gbps services in Austin.

Grande will sell gigabit service for $64.99 per month, undercutting. AT&T’s “GigaPower” service for $70, as well as Google Fiber, also selling for $70 a month.

Grande says its service will have no contracts or bandwidth usage caps, and initially will be available in west Austin neighborhoods, representing about 25 percent of Grande’s addressable market in Austin.

If take rates are as high as Grande expects, the gigabit service will be rolled out to other Grande-served neighborhoods as well.

What isn’t immediately clear is what impact the gigabit offer will have on take rates for other Grande offers in Austin.

Grande has launched faster speeds offers in Austin, Corpus Christi, Dallas, Midland, Odessa, San Antonio, San Marcos and Waco. Though markets outside Austin will not be affected directly, demand in west Austin clearly will be affected.

The new Internet speed options begin at 15 megabits per second for $35 a month and include other offers at 50 Mbps ($45 a month) for 75 Mbps ($55 a month) and 110 Mbps ($65 a month).

In the west Austin neighborhoods where gigabit service is available, the 110 Mbps service obviously will be cannibalized by the gigabit service, which costs the same. But the other issue is how many customers will determine that a gigabit service for $65 is preferable to a 75 Mbps service for $55 a month.

Longer term, one has to expect a resetting of price and value expectations for all the slower-speed services, even if there is no wholesale resetting of prices in the near term.