In 2011, Google announced it was embarking on a quest to challenge America’s cable and internet companies by offering cheap, reliable, and fast internet and cable TV to residential customers. Thus, Google Fiber was born.
The program started in Kansas City, then expanded to Austin, Texas, and Provo, Utah. Eight cities currently offer services to customers, with approximately 450,000 broadband and 70,000 TV subscribers.
Plans were in place to expand the network to dozens of other cities until Alphabet Inc. (NASDAQ:GOOG)(NASDAQ:GOOGL) announced it was pausing the program on Tuesday.
Google is keeping the exact meaning of "pause" close to its vest, but according to inside sources, the reasoning is pretty simple. Google thinks laying down a network consisting of physical wires is an investment that won’t pay off, especially as we move into a more wireless world.
Back in June, Google acquired Webpass, an internet service provider that uses wireless technology to deliver high-speed data to apartments, businesses, and the like. This technology should enable Google to roll out its network faster and cheaper than current methods. It’s just a matter of ironing out a few kinks.
In theory, this all sounds good. Except it’ll likely be years until Google is able to rollout a wireless network that can cover large parts of a city. These projects take time to develop.
Although there are only a couple of internet providers in most U.S. cities, it’s still a fiercely competitive market. AT&T, Verizon, and Comcast are collectively spending tens of billions annually to maintain and improve their networks. It’s tough for even deep-pocketed Google to take on such established competition.
