By David BeasleyReuters—An agreement in which Comcast, Verizon, and YouTube will combine to provide internet to millions of people in rural areas of the United States is a sign that the Internet is gaining traction, and that cable and telecommunications companies are increasingly being outbid for those deals.
Comcast and Time Warner Inc, the biggest cable companies in the country, will acquire a $25.6 billion investment from Comcast for each of the next three years.
Google, the world’s biggest search engine and YouTube, will retain an additional $15.4 billion, according to the agreement.
Comcast is the country’s largest cable provider and Time and Google have been working together on broadband projects in rural parts of the country.
The deal is likely to be a boon for rural areas, which have long relied on telephone and internet service.
It also signals the continued success of broadband as a service in rural America, a demographic that is increasingly shifting away from traditional cable television and toward wireless technology and home Internet services.
The agreement also comes as other telecom companies, including Comcast, have begun offering broadband services in areas where the industry has struggled.
Last year, Comcast bought satellite TV provider DirecTV for $45 billion and launched a $20.4-billion fiber-optic cable and fiber-to-the-home project in Texas.
Time Warner said in January that it would launch fiber-networking technology in areas in Texas, Kansas, Arkansas, Missouri, and Georgia.
Google and Comcast are both major players in Google’s Fiber service, which has been rolled out to homes in more than 50 cities around the country since 2011.
The companies also work together on projects such as Google Fiber, which provides internet access in Google Fiber’s hometown of Mountain View, California, as well as in Seattle, Washington, and the Kansas City, Missouri area.
“This is a great moment for Internet,” said David A. Cohen, chairman and CEO of the Internet Corporation for Assigned Names and Numbers, a nonprofit that promotes Internet freedom.
“It will help us to move forward as a community, and we’re very excited to help build the next generation of infrastructure.”
Google and Time, which will have a combined $12 billion in combined net profits in 2018, are expected to have about 2 million subscribers in rural communities.
The agreement is subject to FCC approval, and Comcast, AT&T, Verizon Communications Inc., and Charter Communications Inc. have also signed agreements to acquire internet service in places where the companies already provide broadband service.
Google, which owns YouTube, has been working to build broadband infrastructure in rural places, including Texas, as it works to become the broadband leader.
In addition to the deal with Comcast, Google also is expected to acquire another satellite TV company, DirecTv, for $40 billion.
“We will work with the other ISPs to build a massive fiber network in rural Texas, and as part of that, we will invest in broadband infrastructure,” Google Fiber CEO Mike Omidyar said in a statement.
“These investments are essential for helping to create a vibrant digital economy in rural and underserved areas.
We have a long history of building broadband in rural locations, and now that we’re at the point where we can deliver broadband in these areas, we are proud to work with these other companies to build an even more powerful network.”