What Exactly Is Going With Google Fiber?

[allheart55 Cindy E]

 

 

In the few markets where it exists — however sparingly — Google Fiber has managed to provide enough of a threat of competition that the nation’s biggest cable/telecom providers have been willing to cut prices and/or improve service. But a number of recent developments, including a report that the Fiber staff is being significantly downsized, have some questioning the future of the service.

 

Last week, The Information reported that Larry Page, CEO of Google parent company Alphabet, had ordered the head of Fiber to cut the staff in half, to around 500 people.

 

Google isn’t talking about that story, but a source familiar with the situation tells Consumerist that the report is inaccurate.

 

What the company has said on the record is that it plans to continue investing in Fiber, but investing capital-F Fiber the company is not the same as investing in fiberoptic cable.

 

Laying Fiber Is A Drag

As Fiber has tried to enter new markets, it’s hit roadblocks like squabbles with incumbent telecom companies over access to telephone poles, or legal claims from existing competitors that Fiber is getting preferential treatment.

 

The cost, hassle, and time it takes to build out an entirely new network in each city has led to some markets, including Portland (the one on the left side of the country) and Google’s Silicon Valley backyard, reportedly giving up hope of getting Fiber anytime soon.

 

Faster, Cheaper, Better

Thus, the company is looking at faster, smaller ways to quickly deploy Fiber access in some cities.

 

For example, in Atlanta Fiber is simultaneously building its own line while paying to use fiber cables already run by the city. And in Huntsville, AL, Google won’t have to dig any trenches or squabble with the phone companies over pole access at all, as the city’s utility company is building out its own fiber network that Google (and possibly others) will pay to use.

 

Google is taking a similar approach in San Francisco, utilizing more than 100 miles of city-owned fiber to connect to schools, office buildings, and apartments.

 

In what was an apparent move to expedite the San Francisco deployment, Google bought a small gigabit broadband company called Webpass in June. Webpass already has fiber service deployed in parts of the Bay Area. But as Bloomberg pointed out in July, Webpass brings with it an efficient method for providing high-speed broadband wirelessly.

 

Wireless Fiber

Alphabet execs have made it known in interviews that they believe that Google may someday be selling Fiber without the fiber.

 

Well, not entirely without fiber. Our source says the wireless tech being tested by Google isn’t intended to replace the Fiber network, but to speed deployment to end users, much like the way it’s easier and more convenient to have a WiFi router in your house than having to physically connect each device to the internet.

 

Even so, that could avoid some of the more time- and money-consuming aspects of launching Fiber in a new market, or expanding existing Fiber service in the few cities where it already exists.

 

It also raises questions, like will it be as fast as the gigabit speeds currently offered by Fiber? How will the data be encrypted? Will the wireless service be able to carry the live TV channels that Google sells in addition to broadband? And, most importantly…

 

Will People Sign Up?

Alphabet has remained remarkably tight-lipped about how many paying customers have actually signed up for Fiber. Even in its financials, Alphabet lumps Fiber in with Nest and Google’s Verily life sciences divisions (along with a few others) under the umbrella of “Other Bets,” so the best anyone without inside information can do is work with the numbers that are available.

 

In the most recent quarterly report, Alphabet said that Other Bets brought in $185 million in revenue, but wouldn’t break it down by divisions. Earlier this year, Recode reported that Nest had brought in $340 million for the company last year, which comes out to $85 million a quarter.

 

Assuming, for this exercise, that the Nest figure is the same this year, that leaves around $100 million. Let’s be incredibly generous and say that all of that remaining amount comes from Fiber. That would put the total number of Google subscribers somewhere between 250,000 and 500,000. Again, that’s making some rather huge assumptions and putting the full $100 million in revenue under Fiber, which is unlikely.

 

Regardless, it gives you a general idea of where Google Fiber sits compared to Comcast and Charter, each of which have more than 20 million customers now, and it’s far short of the company’s reported former goal — according to The Information — of reaching 5 million subscribers within its five years.

 

Granted, Alphabet’s market value is currently around $540 billion, more than three times that of Comcast, but it remains to be seen how long Alphabet will tolerate spending billions, but only making millions, on Fiber each year.

 

Source: consumerist