Google Fiber’s recent pullback reflects a ''course correction,” says Wells Fargo

Google Fiber van in front of Charlotte skyline
Image source: Google Fiber

Google Fiber may have pulled back on some FTTH deployments in certain markets and is considering broadband wireless solutions to extend services to new areas, but financial analysts say that recent news about a pending abandonment of its fiber strategy have been exaggerated.

Jennifer Fritzsche, senior analyst of Wireless/Wireline services for Wells Fargo, said in a research note that Google Fiber isn’t turning away from FTTH but rather is realigning its buildout process.

“We believe recent news around Google Fiber many be more reflective of a ''course correction'' than an abandonment its fiber strategy,” Fritzsche said. “With its acquisition of WebPass, we do believe Google is considering how to use wireless for the last mile. Recall, the last mile cost (as well as the cost to wiring the home itself) can account for 50% of a fiber to the home build.”

Fritzsche added that if Google Fiber adopts a wireless last mile vision in other markets where it does not have fiber yet, the service provider will still need to install fiber to backhaul wireless traffic.

“But even if wireless is used for this last 200 feet or so, this essentially means that the fiber to the base station -- from which the wireless signal is carried -- needs to be that much more durable / robust,” Fritzsche said. “Put another way, fiber should still be very much part of the Google Fiber plan -- even with a wireless solution at the last mile.” 

What has spurred concern over Google Fiber’s fiber strategy were reports in August that the service provider put its planned buildout of 1 Gbps to San Jose, Mountain View, and Palo Alto, California on hold. Mountain View and Palo Alto city officials said they were told that Google is still committed to their projects. Previously, Sunnyvale and Santa Clara, California, were also in talks with the service provider.

At the same time, news that the service provider is moving to launch service in North Carolina shows that Google Fiber isn’t backing off completely on its FTTH plans.

On Tuesday, Google Fiber announced on Twitter that it has begun the signup process in the North Carolina “Triangle” area, starting in Morrisville. Previously, Google Fiber started laying the groundwork for a fiber build in North Carolina las summer by identifying locations for its “fiber huts,” including Raleigh, Carrboro, Chapel Hill, Durham, Morrisville, Cary, and Garner.

Eligible residential customers in Morrisville, can get standalone 1 Gbps broadband for $70 per month, or purchase a broadband and TV starting at $140 per month. Customers also have the option to purchase a standalone 100 Mbps service for $50 per month. Subscribers can also add phone service for an additional $10 per month.

Having already launched its 1 Gbps service in Nashville, Atlanta and Charlotte, it’s clear that the Southeast is a key market target for Google Fiber.

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