Summary Bullets:
- Google Fiber, despite its still-small subscriber footprint, still generates plenty of hype, even after pulling back on its ambitious growth plans.
- With a commitment to buildouts in major U.S. cities, gigabit wireless networking, and ongoing fiber technology development, Google Fiber appears to be in for the long haul, but must fill its leadership vacuum quickly.
Half a decade ago, Google Fiber announced its intentions to blow up the U.S. broadband market by building out its own gigabit fixed broadband service – a massive improvement over most cable and telco broadband services currently offered – for only $70 per month. Most of the Google Fiber footprint is served by GPON networking equipment, with the exception being the Ethernet FTTP assets in Utah, acquired from the failed Utopia project.
After launching service in Kansas City and Austin, the company also boldly declared it would be expanding the Google Fiber footprint into dozens of new U.S. cities, leading to a flurry of excitement.
Google Fiber’s aggressive plans fizzled out in October 2016, when it announced plans to halt expansion in 10 core cities (though two more are apparently in the pipeline).
What happened?
Reality bit Google Fiber hard.
Despite the hype, and a multitude of regulatory exemptions, Google Fiber was not gaining the expected subscriber traction. Surprisingly, the lack of voice service and lack of demand for gigabit service were factors.
Many potential customers still opted for cable alternatives, where competitively priced triple-play bundles (most with lower-speed broadband) proved more alluring.
Also, content carriage costs for Google Fiber’s pay-TV service were higher than those paid by cable and other pay-TV operators because of Google Fiber’s limited distribution.
The Q4 2016 pull-back also saw the exit of Google Access CEO Craig Barratt, as well as the first of two workforce reductions. Barratt’s replacement, Gregory McCray, lasted only five months before his departure in July. Google Fiber is now looking for a replacement.
So, what does the future hold for Google Fiber? There are three key factors to consider:
- The company claims to be committed to serving its core markets… which Google Fiber just expanded to include Louisville, Kentucky this past April. However, when, where and – most importantly – how many remains to be seen.
- Google Fiber acquired Webpass in 2016, which delivers Gigabit broadband over short-range wireless (millimeter wave radio) networks. Webpass is designed to address urban residential buildings, and can supplement the company’s fixed broadband fiber network. Adding in Webpass to its arsenal significantly expands Google’s options within dense urban areas.
- Google Fiber’s technology development team has proposed a new passive optical networking standard, Go-Long, which promises to make fiber deployments much more feasible and lower cost. Clearly, the company would not be investing in such R&D without hopes of a return on investment. However, it’s not clear whether that ROI would come from Google Fiber launching new metros, or by encouraging more fiber deployments not by Google Fiber, but by traditional telcos and cable operators. Either way, the end goal for Alphabet/Google is likely more eyeballs and richer advertising opportunities.
These three factors seem to counter any speculation that Google Fiber will be exiting the fixed broadband market anytime soon.
However, what the company needs is to fill its leadership vacuum, and fast. To this end, Google Fiber needs a CEO who understands not only the networking technology and business model, but also Google’s unique position as a disruptor and catalyst for more rapid evolution of the U.S. broadband market. This may be a tall order, but Alphabet certainly has the resources to fill it.