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Google Fiber Halts Expansion, Will Explore Wireless Options

10/31/2016 8:00 AM Eastern
TakeAway

As it refines its technology approach to gigabit service and looks toward wireless broadband options, Google Fiber has paused plans to enter new markets.

In an apparent recognition of the high expense and operational challenges associated with wireline network buildouts, Google Fiber confirmed last week that it will halt its plans to expand into new cities as it explores new, less expensive wireless alternatives.

 

Tied into that decision, Craig Barratt, senior vice president of Google parent company Alphabet and CEO of its Access unit, said he will be stepping down from that post but staying on as an adviser. Bloomberg reported that Jonathan Rosenberg, a Google vet who also advises Alphabet CEO Larry Page, has stepped in as counselor to the company’s Access unit.

 

Google Fiber also said its pause on expansion markets will result in workforce reductions. It declined to comment on the extent of the layoffs, but Ars Technica reported that Google Fiber will cut its staff by 9%.

 

Google Fiber will continue to operate and expand in markets where it’s already building or offering service: Kansas City; Atlanta; Austin, Texas; Charlotte, N.C.; Nashville, Tenn.; Provo and Salt Lake City, Utah; and the Research Triangle region of North Carolina. Google Fiber is also pushing ahead with a plan to offer services on a fiber network being built by Huntsville Utilities in Huntsville, Ala.

 

“We remain very committed to growth across those cities,” Ruth Porat, Alphabet’s chief financial officer, said last Thursday (Oct. 27) during the company’s third-quarter earnings call, noting that Google Fiber has rolled out service to an additional four new cities, pushing to 12 the number where it’s deployed, in construction or in development.

 

The pause on expansion arrives as Google refines its technology approach and looks toward wireless broadband options. It also comes soon after Google Fiber acquired Webpass, a point-to-point wireless broadband service provider that serves portions of San Francisco, Oakland, San Diego, Miami, Chicago and Boston.

 

Google Fiber had also been eyeing expansions in Los Angeles; Chicago; Dallas; Portland, Ore.; San Jose, Irvine and San Diego, Calif.; Phoenix, Ariz.; Oklahoma City, Okla.; Louisville, Ky.; and Jacksonville and Tampa, Fla.

 

Google Fiber is part of “Other Bets,” the unit of Alphabet that includes longer-term and “moonshot” projects. In Q3, Other Bets posted an operating loss of $865 million on revenue of $197 million, up from $141 million in the year-ago period.

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