Google has announced that its Fiber division would lay off employees and stop expanding into new cities, hobbling the search giant’s six-year-old experiment in becoming an Internet service provider.
In a blog post, the head of Alphabet’s Access division, Craig Barrat, confirmed that he will step aside as the group, which includes Google Fiber, pauses its expansion. Google Fiber will continue to operate in its current cities, which include Kansas City, Austin, San Antonio, and Charlotte.
Barrat announced that Google Fiber would be reducing the number of its employees in previously-announced expansion cities, such as Nashville, Atlanta, and Raleigh, N.C. It is unclear how many people will lose their jobs, but Ars Technica cited a source familiar with the plans as saying that Access would eliminate nine percent of its workforce.
Layoffs and downsizing at Google Fiber have been rumored since August, when a report indicated that Alphabet CEO Larry Page wanted the division to cut its staff in half, to 500. The company spends around $1 billion in startup costs for each new market it enters, according to the report, which suggested that it may seek wireless options that are cheaper than laying fiber-optic cables.
Barrat wrote that Google Fiber’s revenue and subscriber bases continue to grow. Given the enormous capital expenditures, though, it is unclear whether the division is profitable.
“Now, just as any competitive business must, we have to continue not only to grow, but also stay ahead of the curve — pushing the boundaries of technology, business, and policy — to remain a leader in delivering superfast Internet,” Barrat wrote. “We have refined our plan going forward to achieve these objectives.
