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Google’s High-Speed Web Plans Hit Snags
After initial rollouts prove costly, Google Fiber rethinks how to deliver connections in metro areas

By JACK NICAS
Wall Street Journal
Updated Aug. 15, 2016 12:00 a.m. ET
47 COMMENTS

Google parent Alphabet Inc. is rethinking its high-speed internet business after initial rollouts proved more expensive and time consuming than anticipated, a stark contrast to the fanfare that greeted its launch six years ago.

Alphabet’s internet provider, Google Fiber, has spent hundreds of millions dollars digging up streets and laying fiber-optic cables in a handful of cities to offer web connections roughly 30 times faster than the U.S. average.

Now the company is hoping to use wireless technology to connect homes, rather than cables, in about a dozen new metro areas, including Los Angeles, Chicago and Dallas, according to people familiar with the company’s plans. As a result Alphabet has suspended projects in San Jose, Calif., and Portland, Ore.

Meanwhile, the company is trying to cut costs and accelerate its expansion elsewhere by leasing existing fiber or asking cities or power companies to build the networks instead of building its own.

Google’s announcement in 2010 of its Fiber project sparked high expectations at a time when telephone companies were perceived as moving slowly in rolling out faster broadband service. More than 1,000 cities applied and Google began service in the Kansas City area in November 2012. The following month, Google Executive Chairman Eric Schmidt told a conference that Fiber “isn’t just an experiment, it’s a real business and we’re trying to decide where to expand next.”

Today, Google Fiber has reached just six metro areas, the latest example of the challenges facing digital companies seeking to move into more traditional lines of business.

“If you’re in the telecommunications industry for 150 years, there are no surprises here,” said Jonathan Reichental, chief technology officer of the city of Palo Alto, Calif. “But if you’re a software company getting into the business for the first time, this is a completely new world.”

Mr. Reichental said Google Fiber executives recently told him that plans to bring the service to Palo Alto and nearby cities are on hold for at least six months.

In a written statement, Alphabet said, “We’re continuing to work with city leaders to explore the possibility of bringing Google Fiber to many cities. This means deploying the latest technologies in alignment with our product road map, while understanding local considerations and challenges, which takes time.”


Additional excerpts:

The new strategies are in response to the headaches of building a fiber network. In Kansas City, homeowners complained about destroyed lawns and ruptured gas lines. In Nashville, Tenn., and Louisville, Ky., competing telecom firms are blocking the company from stringing fiber on their utility poles.

In Kansas City, Alphabet also is testing a wireless technology that delivers connections from antennas on street lamps. And the company recently applied to the Federal Communications Commission to test “experimental transmitters” for wireless connections in 24 U.S. locations during the next two years.

Google Fiber is planning a system that would use fiber for the central network and antennas to connect each home wirelessly to that network, according to a person familiar with the plans. Alphabet Chairman Eric Schmidt said at the company’s shareholder meeting in June that wireless connections can be “cheaper than digging up your garden” to lay fiber.

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