Google Fiber isn’t dead yet, but the company’s first attempt at providing fiber internet to the home has fallen flat. At its start, Fiber was lauded as one of the most exciting disruptions ever for the ISP market, but it has yet to deliver on its promise.
In October, Google Fiber CEO Craig Barratt announced that he was stepping down, and that the program would be pausing operations in potential Fiber cities. This led to reports that the staff would be halved to offset poor subscriber numbers.
The company did pursue different strategies to build Fiber, like experimenting with wireless gigabit service, but both the internet and video services offered by Fiber haven’t attracted enough people yet.
So, what’s holding Google Fiber back? Here are five reasons why the first iteration of Google Fiber failed.
Almost once a week, I receive a mailer from one of the major cable and internet providers in my city. Right there on the envelope, it explains the new bundle deal they have available and encourages me to make the switch. That kind of marketing has never been Google’s strategy, and it might have cost them some customers.
In the battleground city of Austin, TX, for example, AT&T beat Google to market and aggressively promoted its GigaPower competitor. Additionally, the firm got a 300 Mbps option to market, and offered to automatically roll customers into a 1 Gbps connection once it was available. This gained AT&T more early customers, and potentially locked those users into contracts that would continue through the time when Fiber was actually made available.
From the start, Google Fiber cost $70 per month for the core fiber internet service, with an additional cost for television service. Now, the company has added a cheap, $50 per month option for 100 Mbps service. That low price is good for consumers, and somewhat necessary to win customers over from incumbents, but it doesn’t make business sense.
The low price of Google Fiber simply isn’t earning the company enough money to offset the staggering costs. Rollouts of the service proved much more expensive than initially thought, and took longer as well, which may have led to the company’s decision to put the project on hold for a bit.
While Google is an internet company, it’s not an infrastructure company. And starting to build out infrastructure from the ground up is no easy task. While Google relied heavily on dark fiber deployments and city partnerships, it has encountered numerous roadblocks from its lack of partnerships other providers.
In both Louisville, KY, and Nashville, TN, Google faced lawsuits from incumbents over the use of existing infrastructure like utility poles to hang its fiber cables. Additionally, its lack of resources and slow pace of development within the cities led to it being beaten in markets like Austin and Charlotte, NC, by legacy providers.
To offset the infrastructure costs, Google has targeted wireless broadband initiatives, but it is unclear if the market is ready for that technology.
4. Increased competition
Whether it was Google’s original plan or not, the rollout of Fiber caused a massive backlash from existing providers and dramatically changed the landscape for customers. Google is clearly a catalyst for improving the speeds offered by its rivals, but that may not be to the firm’s benefit.
In markets where Google offered Fiber, Comcast and other providers upped their speeds to compete, often offering a similar $70 per month gigabit option as well. Additionally, other tech firms like Nokia are showcasing innovations that they claim offer even faster internet service. On the wireless side, companies like Starry are also offering gigabit internet over-the-air services as well.
5. Inconsistent service
Internet service providers routinely rank as one of the lowest performers on the American Customer Satisfaction Index, and a lot of that has to do with poor service and outages. However, for a new competitor to enter the market with relatively no history in the space, the stakes are very high.
In fall 2015, Google Fiber experienced an outage during the World Series, leaving many without service for two hours. Outages are nothing new in the ISP space, but an outage of that magnitude could have had a devastating impact on new customers, especially non-techies who weren’t as sold on Google as a service provider.