Google Fiber Hits Pause—What Does It Mean?

On October 25, Google announced it would "pause" development of Google Fiber. In addition, the division’s CEO, Craig Barratt, resigned, and the division was rumored to be laying off about 9 percent of its staff.

Launched in 2010, Google Fiber was the shining light of hope for modern broadband internet service in the United States. It began with the goal of demonstrating gigabit internet on a fiber optic infrastructure, and Google intended it to spur development by others. What happened?

Theories abound in the media. Some of them point to the decision being financial after the company essentially split its operations under a new umbrella named “Alphabet” in 2015. Google Fiber is opposite Google’s more consumer-oriented brands (e.g., YouTube) that are pulling in money for investors, and the division may appear as more of a liability than a lucrative business. It may also be due to lack of current demand for that much bandwidth. The division has also encountered more than its fair share of legal opposition from big incumbents, such as Comcast and AT&T. Also standing in the way were video rights to enable Google to provide TV service. Reportedly, Google was having to pay up to two times as much as its competition.

But in speaking with Jim Hayes, ELECTRICAL CONTRACTOR's fiber optics columnist and president of the Fiber Optic Association (FOA), the story is less about the ending and more about the journey.

The road so far

"The problems Google encountered along the way were predictable," Hayes said. "They built up high expectations that they ultimately couldn't meet."

Especially among young people, it's undeniable that Google has a reputation for being "disruptive" in the tech industry. Tech enthusiasts look to the company to lead the way.

So when Google launched its fiber division in 2010, it heralded the dawn of gigabit internet in the United States. Along the way, in the Federal Communications Commission's fight for net neutrality, judges have even cited Google Fiber as proof that legitimate internet service competition can form in our current political and legal climate.

Further demonstrating the point of Google's reputation, 1,100 cities bid for Google Fiber. Google chose to begin with Kansas City, Mo., and according to Hayes, it was a logical place to start because the city is a major hub for telecommunications crossing the country.

By all accounts, Kansas City was a success.

During Google's 2012 fourth-quarter earnings call, Google CEO Larry Page declared Google Fiber "not a hobby."

"We really think we should be making a good business with this opportunity," Page said.

From there, Google got serious with the division. It turned to Austin, Texas, and that's where the trouble started.

"They hit more competition and encountered more difficulty in Austin," Hayes said. "The competitors started offering good internet service, and demand for Google Fiber went down."

Austin probably became less profitable for Google than the company projected, and it was the first time the company encountered competition from AT&T.

After Austin, Google planned two more phases and 34 more cities. According to Hayes, if they had actually built all of the networks, it could have become a multi-billion-dollar industry.

But it hit significant roadblocks in most of the cities, including legal rebukes from internet service providers (ISPs) that had already claimed the territory. In particular, AT&T fought Google in Nashville, Louisville, Austin, etc. because it owns most of the utility poles upon which the fiber would have to be placed.

In the following years, Google fought for its fiber business in courtrooms, even going so far as to attempt to get city municipalities to pass special ordinances that would enable them to move competitor companies' cable. By that point, lawsuits were inevitable.

Beyond the legal troubles, Hayes said Google encountered difficulty finding sufficient numbers of  qualified and experienced contractors to do the work. After Kansas City, customers in other cities weren't so pleased with the product, and since Google's competition improved their service to meeting the invader, demand dwindled. Construction delays, accidents and mistakes built up resentment. The whole project was marred with complication and failure to meet the high expectations.

Which brings us to now

"Five years later, it's difficult to evaluate the effect of Google Fiber on the broadband business," Hayes said.

On one hand, Kansas City remains a shining success.

"It's great," Hayes said. "People love it."

And in many of the cities Google set its sights on, the competing ISPs improved their service.

On the other hand, they've potentially demonstrated what not to do when building out infrastructure.

"It's a perfect case study for doing things you don't fully understand wrong," Hayes said. "Unless you have a thorough understanding of what a project involves, know how to design and manage it, have people who are trained and experienced, you can't do this kind of stuff."

According to Hayes, five years ago, fiber was looked at as a specialty. Now, it's commonplace and being used everywhere. Hayes said there's a shortage of qualified workers. The FOA works with many communities building their own fiber networks, and Hayes said, it's difficult to find people who are fiber savvy and sometimes they turn to consultants who are not really qualified either.

With all of the difficulties in the industry in addition to the challenges Google Fiber has already faced, where do they go from here?

“In terms of our existing footprint, in the cities where we’ve launched or are under construction, our work will continue. For most of our 'potential Fiber cities'—those where we’ve been in exploratory discussions—we’re going to pause our operations and offices while we refine our approaches,” Barratt writes in the announcement blog post.

Barrat is adamant in his post that Google will “continue this bet.” But questions linger as to how and who will push the project forward.

The future may not be underground

Rollout of Google Fiber has been slow and expensive. It costs a lot of money to bury the cable necessary to deliver service, and qualified and experienced personnel has been difficult to find. One of the most prevalent theories about Google’s decision to pause the division's operations is that, in a decade or so, it may prove to be a wasted investment.

Those competing incumbents noted above? They are all working on next-gen wireless service. Verizon claims to have a technology 50 to 100 times faster than LTE, and AT&T has a project called “AirGig.” With these solutions, if they are achievably reliable and fast, physical fiber cables in the ground may seem draconian by the 2030s.

Toward this end, Google acquired wireless broadband company Webpass in June, and other company purchases suggest the company is eyeing wireless.

“Importantly, the plan enhances our focus on new technology and deployment methods to make superfast Internet more abundant than it is today,” Barratt writes.

All of it points to the potential for Google to sell its fiber networks, a practice companies like Verizon have already engaged in, and according to Hayes, there's going to be a major shakeup in five to 10 years.

"Landline use is declining as users move to cell phones," Hayes said. "Cable TV is starting to decline too, with OTT [over the top—getting your entertainment over the Internet] growing fast. Companies like Verizon and AT&T seem to be betting on a wireless future."

About the Author

Timothy Johnson


Timothy Johnson is the former digital editor for ELECTRICAL CONTRACTOR magazine.

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