Google Fiber puts expansion plans on hold to review strategy

The Alphabet unit is also trimming staff in some locations

Google Fiber has paused plans to roll out fiber optic cables across a number of U.S. cities, as the company reevaluates its strategy to presumably use mainly wireless to provide high-speed Internet service.

Work on Google Fiber is to continue in in the cities where it has been launched or is under construction, wrote Craig Barratt, senior vice president at Alphabet and CEO of its Access unit, of which Google Fiber is a part. In the “potential Fiber cities” where Google Fiber was still at the stage of exploratory discussions, the project will pause operations.

“In this handful of cities that are still in an exploratory stage, and in certain related areas of our supporting operations, we’ll be reducing our employee base,” wrote Barratt, who under the new dispensation moves to the position of advisor to the venture. A new CEO has not been named.

Google Fiber set about five years ago laying fiber optic cabling to provide high-speed Internet access to a number of cities starting in Kansas City. The project claims its subscriber base and revenue are growing quickly, and it expects that growth to continue. But the company has also run into competition from other broadband players like AT&T and hassles of negotiating local bureaucracy.

In July, the Federal Communications Commission also adopted rules to open up 11GHz of high-frequency airwaves for 5G wireless broadband, throwing up opportunities for players like AT&T and Verizon to use wireless to deliver high-bandwidth data services using the spectrum.

Google Fiber had already seen opportunities for making the Internet available to consumers through wireless technologies. It said in June that it was acquiring Internet service provider Webpass to be able to increase its urban coverage quickly and offer customers a combination of fiber and wireless delivery of high-speed Internet. Most of the acquisition, except for a smaller affiliate Webpass Telecommunications, was completed this month.

In April, Google Fiber obtained approval to test Internet delivery on 3.5GHz spectrum in parts of Kansas City that could result in fast, short-range wireless connections to serve areas not reached by Google Fiber.

“Now, just as any competitive business must, we have to continue not only to grow, but also stay ahead of the curve — pushing the boundaries of technology, business, and policy — to remain a leader in delivering superfast Internet,” Barratt wrote.

Alphabet has fine-tuned its plans to achieve these objectives, including by enhancing its focus on new technology and deployment methods to make superfast Internet more abundant than it is today, he added.

The potential fiber cities where the rollout of Google Fiber has been paused include Dallas, Jacksonville, Los Angeles, San Jose, Oklahoma City, Phoenix, Portland and Tampa.

"We’re ever grateful to these cities for their ongoing partnership and patience, and we’re confident we’ll have an opportunity to resume our partnership discussions once we’ve advanced our technologies and solutions," Barratt wrote.

Alphabet clubs projects like Verily, Nest and Access/Google Fiber into the "other bets" category in its earnings report. The projects earned revenue of US$185 million in the quarter ended June 30 this year but ran an operating loss of $859 million.

The focus by Google Fiber on wireless has its critics. In a post in August aimed at Google Fiber, AT&T said broadband investment is not for the "faint of heart." The post by Joan Marsh, AT&T's vice president for federal regulatory, forecast that Google Fiber will discover that wireless networks are expensive to build and that "microwave broadband may work well in dense urban areas, particularly where supported by higher cost commercial services, but offers tougher economics when trying to serve residential customers."

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