By Wendy Lee, San Francisco Chronicle
The executive overseeing Google Fiber said on Tuesday that the service will suspend plans to expand its fast gigabit fiber Internet service into other cities, including San Jose, and will reduce staffing.
“These changes to our business and technology will have some immediate implications,” wrote Craig Barratt, CEO of Access, a division that oversees Google Fiber, in a blog post. “Some of our efforts will remain unchanged, but others will be impacted.”
Barratt said he will also be stepping down from his role as CEO and will remain as an adviser within Alphabet, Google’s parent company.
Google Fiber launched in Kansas City in 2013. There are 8 cities using Fiber and four more on the way. But there’s also a list of eight potential metropolitan areas cities for Fiber, and some of those cities, including San Jose, Santa Clara, Palo Alto and Google’s hometown of Mountain View, will have the Fiber efforts halted for now.
In August, some workers in San Jose were told that the Fiber project was pushed back and were given the option to transfer elsewhere, according to the San Jose Mercury News.
Roughly 9 percent of Google Fiber’s staff will be laid off, a person familiar with the issue told the Chronicle.
“In this handful of cities that are still in an exploratory stage, and in certain related areas of our supporting operations, we’ll be reducing our employee base,” Barratt said.
Google Fiber's subscriber base and revenue are "growing quickly," he said in the blog post, and the division is now refining its approach.
"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.
Part of Google Fiber’s mission was to put pressure on telecom companies to increase the availability and lower the cost of high-speed Internet. Google Fiber succeeded in that goal, but as fiber Internet became more widespread, Google Fiber couldn’t differentiate itself from competitors in terms of the technology itself, said Mark Hung, a vice-president with research firm Gartner.
“At some point, Alphabet (Google Fiber’s parent company) took a look at this and said, ‘Does the ROI (return on investment) make sense?” Hung said.
In June, Google Fiber said it would acquire Webpass. Webpass says it provides superfast Internet through “point to point wireless.” Hung said this type of acquisition could allow Google Fiber to create a sufficiently differentiated product.
Larry Page, CEO of Alphabet, acknowledged Barratt’s hard work in broadening the reach of Google Fiber in a statement Tuesday.
“I’m excited about the potential of providing super fast internet to more people," Page said.
©2016 the San Francisco Chronicle Distributed by Tribune Content Agency, LLC.
