Google’s parent Alphabet is reportedly pressurizing Google Fiber to cut costs

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Alphabet (NASDAQ: GOOG) is currently focusing on the development of wireless technology. This development is in sharp contrast with the previous revelations about the delivery of ultra-fast Internet via fiber-optic cables. The project was previously named as Google Fiber and now termed as Access. According to a report published by The Information, Google parent company Alphabet is gearing up to shake things on the gigabit internet division. Meanwhile, Alphabet CEO Larry Page has demanded to reduce customer acquisition costs to one-tenth their current levels. Page also asked Fiber chief Craig Barratt to the total workforce from the existing 1000 people to 500. Apparently, the recent changes expose the growing rift at Alphabet over the Google’s most prestigious and ambitious projects.

According to industry analysts, the projects such as self-driving car require a huge amount of resource investment. This is because they are ideas for the future. To implement them, it requires a lot of effort and dedication. Moreover, the mutual cooperation of all stakeholders is also required.

Huge Investments Involved

Even though huge investment is required, Page and co-founder Sergey Brin diverted the projects from Google. This includes not only self-driving car but also Fiber, anti-aging biotech division Calico, and smart appliance maker Nest. When these projects were acquired, the founders know about the kind of investment it requires. Moreover, they restructured the company to focus specifically on those projects.

Fate of Google Fiber project hangs in balance

Going by the current trend, the fate of Google Fiber project is very much uncertain since the team has shifted its main focus. As of now, the company is planning to provide the Internet with lower-cost equipment with fewer employees. The Fiber project only got 200,000 subscribers by the end of 2014. However, the ultimate goal was to grab a whopping 5 million subscribers by the end of December 2015.

Currently available in seven metropolitan areas with plans to launch in 16 more cities, the Google Fiber projects requires $1 billion to provide optic piping in Kansas City. According to sources, the cost for implementing Fiber is expected to rise according to places.

In the meantime, Alphabet CFO Ruth Porat defended the Fiber project and told Page that the business model is viable. However, it will take few years for it to become popular and usable.

Evolution of millimeter wave technology

Addressing shareholders call in June, Alphabet chairman Eric Schmidt disclosed that advances in millimeter wave technology could provide a solution because it’s cheaper than digging up your garden.

The new millimeter wave technology is currently employed by Starry. In June, Google Fiber acquired San Francisco-based ISP Webpass to provide high-speed wireless Internet to select locations around the country.

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