Google Fiber (NASDAQ: GOOG) will stop offering its free 5 Mbps service in Kansas City, Missouri -- the first market it built into back in 2012 -- signaling that it wants to increase broadband margins while attracting more potential customers.
In place of the free 5 Mbps offering, Google Fiber will offer a 100 Mbps tier called Fiber 100 for $50, which does not require a construction fee or contract.
The service provider also plans to broaden its efforts to connect economically challenged neighborhoods for free, an initiative it began in July 2015.
Google Fiber will deliver Internet access to low-income residents in all of its fiber-to-the-home (FTTH) markets as part of the Obama administration's ConnectHome initiative.
ConnectHome is a new program launched by the White House and the U.S. Department of Housing and Urban Development (HUD) with the goal of providing Internet connectivity to more school-aged children and families living in HUD-assisted housing in 28 communities across the country.
A possible turnoff for customers was the initial $300 installation fee. Google Fiber still offers the free service in Austin, Texas, and Provo, Utah, but customers must pay $300 to install the FTTH service.
Kansas City is the second market where Google Fiber has shut down its free service. In February, the service provider announced in Atlanta that it would stop offering its free 5 Mbps offering.
Besides realigning its construction fees and speed tiers, Google Fiber is looking to further scale its network in some cities like San Francisco by leveraging existing fiber to roll out its Internet service to "some apartments, condos and affordable housing properties." This initiative allows it bring service to residents more quickly.
Another factor with shuttering the free service could be to keep up with competitors like Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC), which offer similar data speed tiers.
Comcast announced that it would offer a similarly priced $70 per month, 1 Gbps service in Atlanta. However, customers who sign up for the service have to sign a three-year contract to get that monthly price. Customers also have the option to pay $139.95 a month without a contract.
- Re/code has this article
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