Alphabet CEO Larry Page reportedly wants to cut costs in the Google Fiber division after it has fallen "well short" of the intended subscriber goal.
Last month, the executive issued an order to the subsidiary's chief Craig Barratt to downsize the team that consists of 1,000 employees by half and reduce the expenses in delivering the ultrafast internet service to customers' homes.
According to sources who got in touch with The Information, Alphabet cofounders Page and Sergey Brin found the expenditure and rollout of Google Fiber to be more or less disappointing, and as a result, they are now taking the appropriate measures.
At this point, it's still unclear whether or not the layoffs have been carried out already.
A recent report indicates that Google Fiber is now focusing on wireless technology instead of fiber-optic cables, as the original design proved to be too time-consuming and costly. Interestingly enough, the unit has also been renamed as Access, and it's likely because of this development.
Back in the beginning, the company announced the gigabit internet service in February 2010, and it first launched the project in November 2012 in Kansas City. Case in point, Recode reported back in May that $1 billion was spent to set up fiber optic piping in the area.
Initially, Alphabet is said to have aimed for 5 million subscribers within five years, but by the end of 2014, only 200,000 had signed up for the service, a former employee tells The Information.
Fast-forward to today, the current number of users hasn't been disclosed, but a person close to the parent company says that it's still far behind the goal.
Regarding exactly what will happen to the division moving forward is still not known, and whether or not shifting focus from fiber optics to wireless is going to help the team is still uncertain too.
Alphabet CFO Ruth Porat is also said to be supporting the Google Fiber unit wholeheartedly, and she has been telling Page that it's still a viable venture and that it just needs time to work out.
In a recent earnings call (PDF), Porat stated that the company still sees the gigabit internet subsidiary as a "huge market opportunity" and that it's "thoughtful and deliberate" in its execution path.
Google Fiber is currently available in seven locations: Kansas City, Nashville, Atlanta, Charlotte, Austin, Provo and most recently Salt Lake City. It's expected to go live in San Francisco, Irvine, San Antonio, Huntsville and Raleigh-Durham soon.
