Google Fiber is pausing its expansion into new markets
Google Fiber is pausing its expansion into new markets, losing its top executive and planning a round of layoffs. It is the clearest signal yet that the ambitious effort may be on life support.
"In the cities where we've launched or are under construction, our work will continue," Barratt said. But 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."
Barratt also said Google Fiber will be "reducing our employee base." A source familiar with the matter said Google Fiber would cut 9% of staff, or more than 100 employees.
Google's parent company Alphabet reported losing $859 million in the June quarter from its "other bets" division, which includes moonshot projects like Fiber. The Internet effort was said to be the main driver of capital expenditures for the unit.
"It shouldn't be a surprise to anyone that building digital infrastructure is an incredibly costly undertaking, and it also shouldn't be a surprise that it's not a terribly profitable one," says Craig Moffett, a telecom analyst with MoffettNathanson. "These kind of enterprises generally end in tears."
The source familiar with the matter confirmed that Google is focusing on wireless, but said that the use of fiber cables "is not going away."
Alphabet will report third-quarter earnings on Thursday after the bell, which may offer a clearer picture of what's next for Fiber. For now, analysts are hesitant to write off the service for dead. As Rich Greenfield, an analyst with BTIG Research, put it, "I continue to believe we haven't heard the end yet."
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