Google's plans to create fiber optic Internet is not going as planned. With the cost of the project costs skyrocketing, the company might just have to change its plans.
As predicted by industry experts, Fiber optics technology is turning out to be too costly for Google. According to Engadget, Google's parent company, Alphabet, is looking to shake things up in its gigabit Internet division.
The unit, which was previously known as Google Fiber and now Access, is shifting its focus to wireless technology, and not ultra-fast Internet delivered through fiber-optic cables. The process of laying all that fiber optic cable is seemingly making Alphabet's ISP the company's most expensive unit outside of the core Google business.
Low subscriber numbers, as well as some ideological differences with Google Fiber CEO Craig Barratt are said to be some of the main reasons for the shift in focus. According to sources, an order was issued by Alphabet CEO Larry Page to reduce customer acquisition costs to one-tenth of the current level. Page allegedly also asked Barratt to cut the unit's workforce in half, from 1,000 people to 500.
According to Recode, it would cost at least $1 billion for Google Fiber to lay down fiber optics, and the cost is expected to continue rising with each new market. Google Fiber is failing to rise to expectations as the unit has reportedly only signed up 200,000 subscribers by the end of 2014, despite setting a towering goal of 5 million subscribers by the end of 2015.
It has not been a total surprise either. The switch from fiber to wireless was coming for some time. In June, after Alphabet Chairman Eric Schmidt discussed the possibility of using gigabit WiFi to cover the last mile, Google acquired Webpass - a company which was already using a combination of fiber and high-speed wireless connections to do just that.
Earlier this month, The Wall Street Journal reported that Google Fiber would start relying on wireless transmitters to deliver the Internet from fiber lines to homes in cities like Los Angeles, Chicago, and Dallas, with as many as 24 other locations slated for potential testing with Google seeking permission for all of them.