Reports have emerged that Alphabet (NASDAQ:GOOGL) CEO Larry Page has ordered staff cuts to Google Fiber as the division has fallen well short of subscriber goals. The unit has reportedly only signed up 200,000 subscribers by the end of 2014. It had a goal of 5 million subscribers by the end of 2015.
Page has expressed his disappointment with Fiber’s overly aggressive rollout strategy and the high cost of deploying the fiber optic networks. It cost the unit more than $1 billion to lay down fiber optic piping in Kansas City. Demands have been made to reduce customer acquisition costs to one tenth their current level and for Fiber chief Craig Barratt to cut the unit’s workforce from 1,000 people to 500.
When Google restructured as Alphabet last August, a heightened focus fell on the unit and how much money its spending on the course to profitability. The team is now shifting its focus toward providing internet with lower-cost equipment and fewer employees. Google Fiber is currently available in seven metropolitan areas with plans to launch in 16 more cities.
Google Fiber and AT&T have been battling over access to utility poles for a few years now. AT&T previously said it could deny access to its poles because Google wasn’t a “qualified” telecom or cable provider. The companies eventually signed a nationwide agreement granting Google Fiber access to AT&T poles on a city-by-city basis.
Google Fiber construction in Nashville, Tennessee has stalled partly because the new ISP still has problems getting access to AT&T poles. The terms of the previous nationwide agreement cover Nashville, but AT&T declined to explain why there are still holdups. Joelle Phillips, president of AT&T Tennessee, claims that Google Fiber has been making mistakes in engineering drawings that it needs to submit before attaching fiber to AT&T poles, including lines too low to meet the national safety code.
Nashville isn’t the only city where AT&T and Google Fiber are still fighting over pole access. The company is also encountering problems with its roll out in Louisville, Kentucky. The government in Louisville passed an ordinance to speed up construction, but AT&T has sued in an attempt to stop it.
Google Fiber is considering using wireless technology instead of fiber to speed up future deployments. Earlier this month, reports emerged that Google Fiber would start relying on wireless transmitters for the delivery of the internet from fiber lines to homes in cities. Los Angeles, Chicago, and Dallas, and as many as 24 other locales are slated for potential testing of the wireless technology. According to Alphabet, the project is still in the early stages.