Google's parent company Alphabet has scaled back plans, temporarily at least, for its much-touted Fiber high-speed Internet service and will lay off about 9 percent of the employees engaged in the project.
In addition, Craig Barratt, the Alphabet executive who headed Fiber operations, has resigned from his role amid a reassessment of the company's strategy for deploying high-speed Internet services to metro areas around the country.
Effective immediately, Google suspended operations and offices where the company previously announced it would deploy Fiber services but had not yet begun work.
The metro areas affected by the change are Dallas; Oklahoma City; Phoenix, Scottsdale and Tempe, Ariz.; Portland, Ore.; Los Angeles, San Jose, Santa Clara, Mountain View, Sunnyvale and Palo Alto, Calif.; and Jacksonville and Tampa, Fla.
Google will continue to deliver Fiber services or proceed with previously scheduled plans in cities where it has already launched or begun construction on Fiber. The cities and metro areas on this list include Atlanta; Austin and San Antonio, Texas; Kansas City; Nashville; Provo and Salt Lake City, Utah; and Huntsville, Ala.
Employees who are being laid off are mostly from Fiber operations in cities where the company has paused further construction.
In a blog post, Barratt, whose formal title is senior vice president at Alphabet and CEO of Access, described the move as an effort by Alphabet to shift its focus to new technologies and deployment strategies for delivering high-speed Internet services.
"As for me personally, it's been quite a journey over the past few years, taking a broad-based set of projects and initiatives and growing a focused business that is on a strong trajectory," Barratt said in announcing his resignation.
Barratt's note makes no mention of how Alphabet plans to take its vision for Fiber forward.
However, earlier this year, the company acquired Webpass, a San Francisco-based firm that delivers high-speed Internet services to customers in multiple metro areas. Unlike other Internet service providers that rely on wired cables all the way for delivering service, Webpass' approach is to use wireless technology to beam Internet services to antennas on top of buildings from where it is delivered via cable to the end devices.
The approach offers a cheaper alternative to laying down expensive fiber cables, and Google executives have said they plan to take advantage of Webpass' technology to deliver high-speed Internet, especially over the last mile.
A Fiber official speaking on background said that the change in plans announced this week is consistent with earlier statements Alphabet has made about exploring ways to move faster and using a hybrid approach with wireless as an integral part Fiber.
"Fiber is not going anywhere. Think of wireless as just one wire, less," the official said. "You still need fiber backhaul to get the gigabit speeds over the air."
Rumors about Google's scaling back its Fiber plans have been circulating for several weeks. In August, The Information reported that Alphabet CEO Larry Page wanted Barratt to cut Fiber staff by 50 percent and scale back operations because the service wasn't getting the number of subscribers the company had hoped for by this stage. In contrast to early expectations of around 5 million subscribers in five years, Google had only managed to get about 200,000 subscribers for the $70-per-month Internet service.
Alphabet also has run into regulatory and legal problems getting telecom providers and other entities to agree to the use of existing utility poles and other infrastructure for stringing up its own fiber.
"From what I can see, I expect Alphabet's decision to scale back Google Fiber was based on economic factors," said Charles King, an analyst with Pund-IT.
Deploying fiber can be costly and the delays caused by rivals like AT&T protesting Google's use of their existing poles likely pushed out break-even dates for Fiber further beyond what Alphabet preferred, King said.
The recent purchase of Webpass by Google Fiber also may have opened Alphabet's eyes to other options that are not only faster to deploy but involve fewer regulatory hurdles, King said.
"This decision doesn't really indicate new thinking at Alphabet," he said. "A few months back, the company stated that it would take an objective view of the progress made by "other bet" efforts, and reduce support for those that were failing to deliver hoped for benefits."
What's happening to Google Fiber is a manifestation of that new thinking, King noted.