Eight Years Later, Google Fiber Is A Faint Echo Of The Disruption We Were Promised

Google’s 'pause' is driven largely by executive frustrations with fiber deployment costs and a fascination with the potential of next-generation wireless.

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Mar 1 2018, 5:00pm

Image: Getty

In 2010, Google stunned the telecom sector by announcing the company would be jumping into the broadband business. Under the brand banner of Google Fiber, the search giant proclaimed it would be lighting a much-needed fire under the traditionally uncompetitive broadband industry, delivering ultra-fast gigabit connections across the United States.

Initially, the gambit appeared to be paying dividends.

The nation’s media provided Google with an endless wave of free press as cities, frustrated by the high price and slow speeds of existing ISPs, tripped over themselves vying for the company’s affection. The project also drove a much-needed national conversation about a lack of broadband competition in the market and the institutional dysfunction that perpetuates it.

Google Fiber would, we were told, once and for all free the country from the iron grip of regional monopolies like Comcast, delivering ultra-fast broadband at a more reasonable $70 per month price point across huge chunks of the nation. And in initial launch cities like Kansas City, that dream appeared to be quickly coming true.

But that was then, and this is now.

Some eight years on and Google Fiber’s ambitions are just a pale echo of the disruptive potential originally proclaimed by the company.

By late 2016, Google executives clearly started becoming disenfranchised by the slow pace and high costs of digging up the nation’s streets and challenging politically-powerful incumbents.

While Google Fiber did make some impressive early headway in cities like Austin, the company ran into numerous deployment headaches. Fearing competition, incumbent ISPs like AT&T and Comcast began a concerted effort to block the company’s access to essential utility poles, even going so far as to file lawsuits against cities like Nashville that tried to expedite the process.

Even in launched markets, customer uptake wasn’t quite what executives were expecting. Estimates peg Google Fiber TV subscribers at fewer than 100,000, thanks in large part to the cord cutting mindset embraced by early adopters. Broadband subscriber tallies (estimated as at least 500,000) were notably better, but still off from early company projections.

Even without anti-competitive roadblocks, progress was slow. Digging up city streets and burying fiber was already a time-consuming and expensive process. And while Google has tried to accelerate these deployments via something called “microtrenching” (machines that bury fiber an inch below roadways), broadband deployment remains a rough business.

It’s a business made all the rougher by state and local regulators and lawmakers who’ve been in the pockets of entrenched providers like Comcast for the better part of a generation. In many states, incumbent ISPs like AT&T and Comcast quite literally write state telecom law, resulting in protectionist legislation that can often make competition impossible.

By late 2016, Google executives clearly started becoming disenfranchised by the slow pace and high costs of digging up the nation’s streets and challenging politically-powerful incumbents. Company executives announced that they’d be laying off a notable number of employees and temporarily pausing any expansions into new territories.

"In the cities where we've launched or are under construction, our work will continue," said Craig Barratt, then CEO of the Access division at Google that oversaw Google Fiber. He added that for additional cities that were in talks to receive Google Fiber, "we're going to pause our operations and offices while we refine our approaches."

But it wouldn’t take long for Barratt to also leave the company, as Google Fiber burned through two CEOs in less than a year’s time. Barrett was replaced by Greg McCray, former CEO of Aero Communications, who only lasted four months at the job. McCray in turn was recently replaced by former Time Warner Cable executive Dinnie Jain.

Google’s “pause” is driven largely by executive frustrations with fiber deployment costs and a fascination with the potential of next-generation wireless.

The company has been conducting trials in the 71-76 GHz and 81-86 GHz millimeter wave bands, and is also conducting a variety of different tests in the 3.5 GHz band, the 5.8 GHz band and the 24 GHz band. And while these technologies show promise, it’s going to take a while for Google to figure out the best combination of technologies to aid its deployment.

Ideally, Google Fiber’s deployments will accelerate again once Google Fiber executives have a more solid grasp on what next-generation wireless broadband will look like.

And while Google Fiber has focused on wireless as an alternative to deploying fiber, those efforts have faced stiff headwinds as well. In July of 2016 Google acquired Webpass, a wireless ISP focused largely on urban apartment building deployments. But there too Google Fiber’s ambitions appear to be shrinking with the recent news the service would be leaving Boston.

Since Google executives don’t appear to actually know what these evolved wireless efforts will look like yet, the company’s public relation apparatus has been left with little more than a rotating crop of non-answers, sowing further frustration among cities trying to get on the other side of the nation’s vast digital divide.

Users In the company’s initial launch market of Kansas City were frustrated to find their scheduled installations cancelled after years of waiting. Other cities, like Portland, state that they were strung along for more than a year only to be left standing at the altar. Some rumored target markets like San Francisco have decided to move forward on their own.

Speaking at the Morgan Stanley Technology Conference this week, Alphabet CFO Ruth Porat insisted that the company’s dedication to disrupting the broadband market remains intact.

“The one thing that has not changed is our view that there is a real need for quality service,” Porat told attendees. “We're still implementing and executing in the cities that we announced, but we've slowed the pace of rollout so that we could spend time on how do we really bring technology to bear in a more meaningful way,” she added.

"As we were looking at our rollouts going back to 2015, 2016, our view was that we had not done enough," Porat said. The CFO added that the company hadn’t yet achieved its "10x moment," or a 10-fold improvement over existing broadband technology it felt was necessary to truly be disruptive.

But again, reports indicate Google Fiber’s price tag is as much a reason for Google Fiber’s pause as its lagging disruptive potential. Porat has been trying to bring some financial constraint to a company long known for throwing billions at radical moonshots. But when asked when Google Fiber might hit the “unpause” button, Porat wandered into murky, non-answer territory.

“When you ask about milestones, in our view, when we have something that is substantive enough of value to justify accelerating the roll-out again, that's how we're looking at it,” said the CFO.

To be clear, Google Fiber has had a massive net positive impact on the telecom market. The service not only generated a necessary conversation about the lack of competition in broadband, but Google actively worked to provide cities with a template to not only help streamline private-sector deployment, but build their own networks if so inclined.

And in markets that Google Fiber has been deployed, it has resulted in a dramatic reduction in prices among regional incumbents. AT&T, for example, initially charged as much as $150 per month for its own gigabit broadband service, a service it was forced to re-price to $70 in areas where it faces competition from Google Fiber or municipal broadband networks.

Ideally, Google Fiber’s deployments will accelerate again once Google Fiber executives have a more solid grasp on what next-generation wireless broadband will look like.

But there remains a steady undercurrent of concern that company executives have simply grown bored with the high cost of building broadband networks no matter what those networks look like. As such it remains a very real possibility that Google offloads the project eventually, leaving us all once again lost in the angry embrace of monopolies like Comcast.