In one of the first major shifts since a major corporate restructuring, Alphabet – the parent company of Google – is pausing a planned expansion of high-speed internet in cities across the country.
Last year, Google re-branded itself as Alphabet and broke out its “other bets” – initiatives other than the core search engine business – into separate subsidiaries that are responsible for their own results in an attempt to instill additional discipline on ambitious projects.
As part of that shift, a new division – known as Access – was created to house the company’s efforts to compete with cable and telecommunications companies by deploying new high-speed internet options. Commercially known as Google Fiber, the project has rolled out new networks in major cities and was charging $70 for high-speed internet plus $60 for a television option.
However, the company had never revealed details on the number of subscribers. Some analysts have suggested that, given the massive costs of building such a network, the company was hemorrhaging large amounts of money on the fiber project.
In a stunning announcement Tuesday, Craig Barratt, the chief executive of Access, announced that he is leaving the company and that Access is putting a halt on Google Fiber projects across the country. Ongoing projects will be completed, but new work will not start in cities that were awaiting Google Fiber.
Despite the hasty retreat, Alphabet may still have secured a victory from the Google Fiber attempt.According to The New York Times, part of the motivation for Google Fiber was to force internet providers to increase their speeds to benefit Google’s search engines. Some, including AT&T, have now done so.