Google's fiber ambitions may be too expensive as it seeks broadband alternatives

Google Fiber van in front of Charlotte skyline
A Google Fiber van in Charlotte, North Carolina. (Source: Google Fiber)

Google Fiber may have ignited a new dialogue about FTTH speeds, but the service provider has found that the build out is more expensive than it initially thought.

To overcome the cost barriers of delivering 1 Gbps services to more homes, the service provider is seeking a host of alternatives, including broadband millimeter wave wireless and leasing dark fiber from other local providers. Thus far, Google Fiber’s penetration is relatively low as it offers its service in only six metro areas.

Last week, a report emerged that the service provider’s planned buildout of 1 Gbps in San Jose, Mountain View, and Palo Alto, California is on hold, suggesting that it is looking at a less expensive alternative to wireline internet service following its acquisition of fixed wireless provider Webpass.

In other markets like Huntsville, Alabama, Google Fiber has struck a deal with Huntsville Utilities to use its soon-to-be-built dark fiber network instead of building its own to serve local businesses and residential customers.

Google Fiber is also talking to a Tampa-based power company to build a fiber network and it is working with real-estate firm Irvine Co. to pre-install fiber in new properties near Irvine, California.

The service provider has taken these new approaches to not only control costs, but also overcome issues with building out fiber that it faced in Kansas City and other markets. Kansas City homeowners complained about destroyed lawns and ruptured gas lines. Meanwhile, AT&T has made an effort to block Google Fiber from gaining access to utility poles in Nashville, Tennessee, and Louisville, Kentucky.

Although Google Fiber’s parent Alphabet does not disclose the fiber division’s revenues, it couples them with its “Other Bets” division, according to a WSJ report. The “Other Bets” unit reported $185 million in revenue in its latest quarter, a factor related to Google Fiber, the Nest home automation unit, and life sciences unit Verily. Google Fiber made up the majority of the Other Bets unit’s quarterly capital expenditures of $280 million.

Regardless of the challenges, Google Fiber maintains that the unit will become profitable via its subscriber fees and getting consumers to click on its search ads. Eligible consumers can get the 1 Gbps service for $70 a month, while TV costs an additional $60 a month.

Google Fiber won’t release actual subscriber numbers, but a MoffettNathanson report revealed in March that the Google Fiber had 53,000 TV service subscribers. The research firm said that the internet service likely has more customers than video, but could not provide a specific estimate.

For more:
- WSJ has this article

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