- George Frey/Reuters
Google’s ambitious plan to spread high-speed internet service across the US has hit a bump in the road as the group leading the charge scales back its operations and is roiled by a management shake up.
Craig Barratt, the head of Google Access, is stepping down and the company is freezing plans to roll out the high-speed Google Fiber broadband service to 8 new cities, company announced on Tuesday.
Access, which is owned by Google parent company Alphabet, will lay off about 9% of its staff, or between 100 and 200 employees, as part of the change, a source familiar with the matter told Business Insider.
The move marks a significant setback for one of parent company Alpahbet’s most high-profile and ambitious projects. And it represents the latest sign of turmoil among Alphabet’s collection of subsidiary companies, coming on the heels of CEO exits at Nest and Google’s Project Wing drone group.
The change is likely to raise questions about Alphabet’s committment to the diverse money-losing projects under its roof, particularly ahead of the company’s quarterly earnings report on Thursday.
In an emailed statement to Business Insider, Alphabet CEO Larry Page said the company was not abandoning its role in the internet service business.
“I’m excited about the potential of providing super fast internet to more people. Craig has worked hard to scale this business, and I look forward to continue working with him in his new role as an Advisor,” Page said.
Barratt, a former CEO of wireless chip company Atheros who joined Google in 2013, will stay at Google parent Alphabet as an advisor. Google has tapped a trio of Access executives, including longserving Access member Milo Medin, to lead the group on an interim basis while it looks for a replacement for Barratt.
Goodbye Los Angeles
Google said it will continue to offer its Fiber service in cities where it has launched, but it has pulled the plug on plans to expand to Los Angeles, Portland, Oregon and a handful of other cities.
“For most of our “potential Fiber cities” – those where we’ve been in exploratory discussions – we’re going to pause our operations and offices while we refine our approaches,” Barratt said in a blog post announcing the news.
“In this handful of cities that are still in an exploratory stage, and in certain related areas of our supporting operations, we’ll be reducing our employee base,” he said.
The layoffs will primarily involve workers involved in the deployment of Google Fiber in the new cities, the person familiar with the matter said.
Google Fiber started offering Gigabit speed internet access to Kansas City residents in 2010, expanding the service to a handful of other cities aftewards.
But the effort, which involves digging up streets and gettting access rights to utility poles, is extremely costly and subject to a thicket of regulatory and competitive challenges.
Google Fiber is among the most capital intensive of Alphabet’s so-called Other Bet companies. In the second quarter, the Other Bets lost a combined $859 million on revenue of $185 million.
Over the past year or so, Access has increasingly turned its sights to wireless technology as an alternative means of delivering high speed access to consumers, particuarly with the June acquisition of Webpass.
According to the person familiar with the matter, the Access group is halting Fiber rollout plans in the new cities because it has decided to refocus the service on wireless, which is ultimately a much faster way to roll out internet service across cities.
As Business Insider has previously reported, the company is currently working on various wireless technologies that can best serve the differing environments and landscapes of various cities.