The information came to light courtesy of a report by news site The Information. The unit, which is now known as Access instead of Google Fiber, is not meeting the expectations of Alphabet CEO Larry Page. Mr. Page, according to the reports, wants chief Craig Barratt to trim Fiber’s workforce to 500 from 1,000. He also wants to reduce the costs of acquiring new customers to a tenth of what it currently costs. Understandably, such drastic measures cannot take place overnight; it is not clear whether a deadline has been provided to implement the new measures.
In any case, the measures seem counter-productive for a product that is supposed to be in the expansion phase. The mission and vision behind Google Fiber is not clear anymore. It started out as an Internet service based on super-fast fiber optic cables. Earlier this month, Fiber began tests for wireless service in around 24 localities within the US. The shift to wireless broadband technology kind of negated Fiber’s brand name and all it stood for, which is perhaps why Fiber is being included in Google/Alphabet’s Access unit.
As The Verge pointed out, Alphabet CFO Ruth Porat believes that Fiber’s business model can work if given enough time. However, Google co-founders Larry Page and Sergey Brin both believe that Fiber’s strategy for rolling out its service is not exactly reaping rewards. Google basically has to lay all the groundwork, and the amount of costs added to the company’s bills is a deterrent to profitability. Each city Google expands to will need fiber optic cable layout after meeting feasibility reports, which perhaps indicates that Google will not be able to reach every city in the US anyways.
Ever since Google became Alphabet, the focus has largely shifted to profitability rather than ambition. Google’s X division was responsible for a number of ambitious projects, not all of which made the cut. Google’s self-driving car project seems to be heading in the right direction, and Project Loon has been given fresh impetus with the recruitment of WildBlue Communication’s Tom Moore. Nest and Calico have become separate divisions under the Alphabet umbrella. Now it seems like Fiber has been given its chance, but Alphabet is not entirely confident in the division’s ability to reap profits.
Alphabet chairman Eric Schmidt pointed out millimeter wave technology as one possible alternative solution to fiber optic cables. It appears that alternative solutions might be the way to go, because digging up the entire country does not fall in line with Alphabet’s cost-saving aims. Project Loon has already made progress in beginning to serve far-flung areas, and capturing a niche market in the process. Fiber cannot boast of a similar achievement.
Land-based broadband technology is not something new in any case; with the amount of smartphones, tablets, and laptops out there, direct wireless technology appears to be the more feasible, long-term solution. Alphabet has perhaps picked up on that, and is cutting its costs before it is too late.