Photographer: Julie Denesha/Bloomberg

Alphabet Cutting Jobs in Google Fiber Retrenchment

  • Top executive leaves after disagreement over Fiber strategy
  • Google Fiber cuts expansion plans in eight large cities

Google in the past two years put in place plans to expand its Fiber fast internet service to more than 20 cities. Inside the company, executives harbored bigger ambitions: to deliver service nationwide and upend the traditional broadband industry.

Google parent Alphabet Inc. reset the project on a more humble footing on Tuesday. Craig Barratt, head of the Access unit that includes Google Fiber, is leaving, and about 9 percent of staff is being let go, according to a person familiar with the situation. The business has about 1,500 employees, meaning there will be more than 130 job losses.

Barratt wrote in a blog that the company is pulling back fiber-to-the-home service from eight different cities where it had announced plans. Those include major metropolitan areas such as Dallas, Los Angeles and Phoenix.

Moving into big cities was a contentious point inside Google Fiber, according to one former executive. Leaders like Barratt and Dennis Kish, who runs Google Fiber day-to-day, pushed for the big expansion. Others pushed back because of the prohibitive cost of digging up streets to lay fiber-optic cables across some of America’s busiest cities.

"I suspect the sheer economics of broad scale access deployments finally became too much for them," said Jan Dawson, an analyst with Jackdaw Research. "Ultimately, most of the reasons Google got into this in the first place have either been achieved or been demonstrated to be unrealistic."

Some executives previously described Google Fiber’s business model as working best in mid-sized cities. In those markets, the costs of fiber installation isn’t as high and incumbent telecom companies have less of a footprint. 

On recent earnings calls with analysts, Ruth Porat, chief financial officer of Google and Alphabet, defended the company’s investment in Google Fiber, which she has cited as its most expensive unit outside of the main Google online search and advertising business.

With its planned Fiber expansion, Access staff had nearly tripled from 500 from last year, according to the former employee.

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