PhotoA high-fiber diet is good for you, but it can also cause indigestion, as Google and its parent company, Alphabet, are learning. For years, Google has been talking about how it is just about to lay fiber to deliver high-speed broadband in cities across America.

But like so many others before it, the advertising giant may be discovering that digging up streets and climbing poles isn't as much fun, or as profitable, as many of the alternatives. The telecom business is about 150 years old and, while transmission technologies have advanced, the basic tools of the trade are still the backhoe and a good set of spikes for scampering up poles. It's what's called capital intensive. 

While no one denies that fiber is the fastest terrestrial delivery system for broadband communications, the key word may be terrestrial. Verizon, which sort of wrote the book on broadband fiber, quit somewhere around Chapter 3. 

Verizon's FiOS is popular in the cities where it's available, just as Google Fiber is popular in Kansas City, Kans., Austin, Texas, and a few other places. But Verizon now has its eye on 5G -- wireless delivery that some of its boosters say will be as fast or even faster than fiber and a lot cheaper to deploy and operate. Other carriers have similar strategies.

Although the always secretive Alphabet isn't saying so, it's generally thought that its initial roll-outs took a lot longer and cost a lot more than it expected. Whether Alphabet has the appetite to digest an entire menu of fiber-starved cities is the question of the day. The Wall Street Journal reports today that Alphabet has told local officials in several cities that it is slowing its fiber deployment. 

Last-mile expense

All of the major telecom and cable firms have for years used various strategies to avoid the expense of running fiber to every single customer -- the dread "last-mile" expense that far exceeds the costs of building the network "backbone."

Many have adopted what is generally called "fiber-to-the-curb" strategies that run fiber into a neighborhood, then use coax or other lower-speed cable to reach individual subscribers.   

Was Google naive in thinking it could dig trenches more cheaply than AT&T? Maybe, but there are those who think its strategic goal in launching Google Fiber was to spur established players to get the lead (or copper) out and put more fiber into their networks. That strategy has actually played out in several of the cities where Google Fiber is now operating or promised, thus presenting the company with the opportunity to declare victory and withdraw. 

It's equally likely that Alphabet, which was created to bring some business discipline to the rather free-wheeling Google culture, is simply looking at options that would achieve its ultimate goal -- widely deployed high-speed broadband that delivers Google ads flawlessly -- in a more cost-effective way.

It's not the only adjustment underway in Mountain View. Like a player preparing for a new hand of Scrabble, Alphabet has been shuffling its players and priorities the last few months. Several key executives have left, including those who headed up the automated car and Nest thermostat projects. It's not surprising there would be adjustments in Fiber, thought to be its most costly new-business gamble.  

Share your Comments