Why Google Fiber Failed to Disrupt the ISPs

["Dave Farber" <farber () gmail com>]

Begin forwarded message:

> From: Dewayne Hendricks <dewayne () warpspeed com>
> Date: July 25, 2017 at 10:59:35 AM EDT
> To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>
> Subject: [Dewayne-Net] Why Google Fiber Failed to Disrupt the ISPs
> Reply-To: dewayne-net () warpspeed com
>
> Why Google Fiber Failed to Disrupt the ISPs
> Where’s the fiber-optic internet we were promised?
> By Victor Luckerson
> Jul 21 2017
> <https://theringer.com/google-fiber-struggles-7d2bb5399a12>
>
> This week brought more bad news for Google Fiber, the search giant’s troubled bid to become a powerful internet 
> service provider. On Tuesday, Greg McCray stepped down as CEO of the company’s ISP business (now formally housed 
> under Access, a subsidiary of Google parent company Alphabet). His departure comes just nine months after Craig 
> Barratt left the same role. Meanwhile, the Access division has faced staffing cuts, and aggressive plans to expand to 
> more cities are on hold indefinitely. Google Fiber began as an experiment, then briefly seemed poised to grow into a 
> legitimate contender against the ISP incumbents. But today it serves as proof that providing high-speed wired 
> internet is a losing proposition, even for one of the world’s wealthiest companies.
>
> Early on, Google was careful to couch its ambitions as a provider of high-speed internet. The original February 2010 
> announcement of Fiber called it an “experiment.” Kansas City, Missouri, the first place to get Google Fiber in 2012, 
> was thought of as a “test bed.” Journalists speculated that Fiber was largely a symbolic project meant to shame the 
> biggest ISPs into offering faster internet speeds, thus creating an environment of ubiquitous lightning-quick 
> internet that Google could service with its bread-and-butter products like Search and YouTube. Fiber has succeeded on 
> that front. Companies like AT&T have raced to offer gigabit internet in specific markets before Google could, and 
> this spring Verizon announced it would begin offering near-gigabit speeds to more than 8 million customers in East 
> Coast cities.
>
> Google clearly wanted Fiber to be more than a moonshot, though, and slowly revealed ambitions of building an ISP with 
> national scale. In 2014 the company announced that it would explore expanding Fiber to nine new metro areas, up from 
> three previously. The same year, Barratt was promoted to be a key lieutenant to Google CEO Larry Page, alongside big 
> names like Sundar Pichai and Susan Wojcicki. Google steadily rolled out new Fiber cities and teased potential 
> launches in others through 2016.
>
> But burning money on a high-speed internet gambit made less sense after Google restructured into Alphabet and brought 
> on CFO Ruth Porat. Both moves were meant to inject more fiscal responsibility in a company that prides itself on 
> maintaining a culture of innovation. Digging up city streets to lay fiber-optic cable is wildly expensive. Last year 
> Alphabet revealed that Fiber made up the majority of capital expenditures for its “Other Bets,” the catch-all 
> categorization for its many far-flung businesses that are not tied to the core Google products. Getting permission to 
> install a fiber network requires working with city leaders, which increases expense and slows deployment. Most 
> worryingly, there’s scant evidence that consumers are willing to pay for gigabit internet en masse, despite its 
> growing availability. Google aimed to get 5 million people to sign up for Fiber within five years but widely missed 
> its target, according to The Information.
>
> “Even Google can’t afford to just do projects and just lose a whole bunch of money,” says Dan Rayburn, principal 
> analyst at Frost & Sullivan. “I think you’re stuck with the incumbents.”
>
> These combined factors are probably why the bloodletting began in Google’s Access division last year. Barratt stepped 
> down in October 2016, and in that same month, 9 percent of Access’ 1,500 employees were let go, and plans to expand 
> to markets such as Los Angeles and Dallas were halted, according to Bloomberg. In February, when McCray was named the 
> new CEO, hundreds more employees were reportedly movedfrom Access to Google. McCray’s recent ouster didn’t come with 
> another round of downsizing (it may be tied to inappropriate office comments), but it still leaves the company 
> rudderless for the time being.
>
> [snip]
>
> Dewayne-Net RSS Feed: <http://dewaynenet.wordpress.com/feed/>



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