What Went Wrong With Google Fiber?

Google Fiber, we hardly knew ya'.

Google parent Alphabet's decision to put the brakes on its superfast fiber-based internet service represents a disappointing setback for one of the Silicon Valley titan's most ambitious "moonshots."

In a corporate blog post earlier this week, Craig Barratt, CEO of Google Access, the Alphabet division that operates Google Fiber, announced that he is stepping down from his role as the company makes "changes to focus our business and product strategy."

Barratt said that while the tech giant will continue to operate Google Fiber in the cities where it has promised to do so, work is being "paused" in the cities where it hasn't committed to operating the service. And about nine percent of Google Access's 1500 employees, or approximately 130 workers, are being let go, according to published reports.

Barratt stressed that Alphabet remains committed to its vision of connecting more people to "superfast and abundant internet." But for now, the company is clearly scaling back its once lofty ambitions to introduce wired gigabit internet service from coast to coast in an effort to offer consumers an alternative to mostly slower, mostly costlier services delivered by the likes of Comcast, Charter and AT&T.

For consumers hoping to break free from the tyranny of these cable and telecom incumbents, which wield monopoly or duopoly power in many parts of the country, this development is sure to be a major bummer. For executives at the nation's dominant cable and phone companies, however, the news is sure to be greeted with cackles of delight and no small amount of schadenfreude.

What does Google Fiber's "pause" mean for you?

If you live in the following cities, rest easy, because Google Fiber will continue to be available: Atlanta, GA; Austin, TX; Charlotte, NC; Kansas City in MO and KS; Nashville, TN; Provo, UT; Salt Lake City, UT; and North Carolina's Triangle region.

But for folks in some of the nation's largest urban areas, you're out of luck, at least for now. These include Los Angeles, CA; Chicago, IL; Phoenix, AZ; Portland, OR; San Diego, CA; San Jose, CA; Dallas, TX; Jacksonville, FL; Oklahoma City, OK; and Tampa, FL.

"We're ever grateful to these cities for their ongoing partnership and patience, and we're confident we'll have an opportunity to resume our partnership discussions once we've advanced our technologies and solutions," Barratt wrote. One of those technologies is wireless internet service, which is why Alphabet recently bought Webpass, a company that delivers "last-mile" high-speed wireless signals to buildings in several cities.

So what happened to Google Fiber?

For one thing, building out a brand new wireline communications network from scratch is costly, difficult work. Permits must be obtained, partnerships with local governments must be struck, and obstacles thrown up by incumbent ISPs and their allies in statehouses must be overcome. Then there's the small matter of actually building out the network—laying fiber in the ground, or stringing fiber on utility poles—which is an expensive, labor-intensive, and time-consuming endeavor.

"I suspect the sheer economics of broad scale access deployments finally became too much for them," Jan Dawson, an analyst with Jackdaw Research, told Bloomberg. "Ultimately, most of the reasons Google got into this in the first place have either been achieved or been demonstrated to be unrealistic."

Then there's the changing nature of Alphabet itself. As the Silicon Valley search giant (and its top executives) have matured, and as the company's once-torrid growth-rate has slowed, its ambitions have returned to Earth, in some cases literally. Gone are the heady days when Google's co-founders, Larry Page and Sergey Brin, entertained outlandish dreams of building space elevators, for example. (As far back as 2014, that project was put in a "deep freeze.")

Meanwhile, Alphabet is under increasing pressure from Wall Street to rein in the costs associated with its more fantastical moonshots. Alphabet's moonshot bets, which include its secretive X R&D lab, lost a whopping $859 million in the second quarter of 2016. Google Glass, the company's high-tech eyewear project, failed to live up to expectations and has gone into hibernation. And earlier this year, Alphabet reportedly put its Boston Dynamics robotics division up for sale.

In 2015, Alphabet poached former Morgan Stanley executive Ruth Porat to be its new chief financial officer, and while Porat has publicly insisted that the company remains committed to Google Fiber, there can be little doubt that project's "pause" is, at least in part, a consequence of her mandate to bring more financial discipline to the company.

One thing seems clear: Alphabet's decision to halt its fiber expansion increases the urgency for cities and municipalities around the country to build community broadband networks if they want faster, cheaper alternatives to the dominant internet service providers. It appears increasingly likely that Google Fiber won't save you, people, so maybe it's time to take matters into your own hands.

Correction: This story was updated after publication to clarify that all of Alphabet's moonshots lost $859 million, rather than the X lab on its own.

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