Originally launched in 2011 on Stanford University’s campus in Palo Alto, Calif., Google Fiber had an ambitious plan to use optical cables to stretch incredibly high speed broadband internet and cable television services to cities across the country.
Now following a consistent lack of revenue due to low enrollment numbers for the high speed service, Craig Barratt, the CEO of Google Access (an Alphabet Inc. subsidiary) is stepping down. The company is also pausing plans to introduce Google Fiber to new cities and planning to lay off nine percent of its workforce, between 100 and 200 employees.
“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 in a blog post Tuesday, announcing the forthcoming changes. He continued on to say, “we have refined our plan going forward to achieve these objectives.”
This comes as the most recent setback for Alphabet subsidiaries following the recent resignations of the CEOs for both Nest and Project Wing. Tony Fadell, the CEO of Nest, the smart-home company Google bought in 2014 for $3.2 billion, stepped down in June of this year, while Project Wing, Alphabet’s experiment drone program, announced CEO Dave Vos’s resignation last week.
When Google Fiber launched its service citywide for the first time in Kansas City in 2011, the company immediately hit roadblocks in connecting the service through certain areas. In order to qualify for service, neighborhoods had pre-register a specific percentage of households. While the city’s affluent neighborhoods immediately qualified, lower-income areas by and large did not, according to Wired.
And this scenario was not isolated to Kansas City. The Google Fiber service encountered similar complications in cities across the nation, leading to overarching questions about fairness and equality within the broadband industry and specifically with respect to Google Fiber.
The issue, however, is that spreading the fiber connection requires digging up streets, getting access rights to utility poles and navigating an increasingly complicated arrangement of competitive and regulatory challenges, all of which is incredibly expensive. Currently Google Fiber is one of the costliest companies in Alphabet’s “Other Bets” division which lost a combined $859 million in the second quarter of this year alone.
In order to make Google Fiber work, the company is rethinking its approach to bringing high speed access to cities. “We have refined our plan going forward to achieve these objectives,” Barratt said in his post. “It entails us making changes to focus our business and product strategy. Importantly, the plan enhances our focus on new technology and deployment methods to make superfast Internet more abundant than it is today.”
It appears that one of the new technology and deployment methods Barratt referred to is to work to implement a widespread wireless network that would create a faster way to introduce economical citywide access to high speed internet.
While cities that already have Google Fiber or are currently under commitment for construction will not be affected, cities that had preliminarily been listed as “potential” Fiber locations will be put on hold and individuals currently employed in those cities will likely be downsized, according to the tech news site, Ars Technica.