Google Fiber Halts Operations In Phoenix

Published: Friday, November 4, 2016 - 7:43am
Updated: Friday, November 4, 2016 - 2:41pm
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A map on Google Fiber's still shows Phoenix as a potential location.

For five years, Google and its parent company Alphabet have been spending heavily on a project called Google Fiber, an ambitious plan to extend lightning-fast internet across the country.

But Google has announced it is halting that rollout in eight major metro areas, including Phoenix.

The news is a setback for the communities that were hoping greater connectivity would lead to growth.

From Phone Lines To Fiber Optics

Over time, connection speeds have increased exponentially. These days data moves at the speed of light through fiber optic cables. Much of this technology has been driven by large telecom companies like AT&T and Comcast.

Here in Phoenix alone, Cox Communications Vice President Susan Anable said her company has invested hundreds of millions of dollars into the high speed data network.

“And we are continuing that investment with the inclusions of our gigabit speed internet and other services,” Anable said.

Google Enters The Market

But in 2010, a new player arrived — Google.

The Silicon Valley giant announced an ambitious plan to roll out lots of fiber-optic wires. More than a 1,000 cities clamored to be chosen as a testing ground.

After a nationwide search, Google chose Kansas City. “Google Fiber has been a game-changer," said Rick Usher, assistant city manager in Kansas City, Missouri.

Usher said when Google installed high speed internet throughout his city 2012, the impact was huge.

“It’s ignited our startup entrepreneur company and new interest in learning to code," Usher said. "It’s opened the city’s eyes to the possibilities of technology.”

Cities Vie To Become Fiber Cities

The next year, Google Fiber started to expand, adding seven more cities including Austin and Salt Lake. And they floated the idea of growing to more markets.

Tempe city councilman Kolby Granville was eager to get on the short list. “I would have been out there digging the trenches with them," Granville said. "I wanted it that bad.”

Tempe joined with Scottsdale and Phoenix in their quest to become a Google Fiber city.

Granville was hopeful that a newcomer could shake up the market.

“Tempe’s really a two or three internet company town," Granville said. "We have one cable internet provider that provides high-speed internet. We have one DSL provider that provides high speed internet. And a few people have satellite dishes on their house and that is it.”

Tempe business owners wanted the new service too.

Nick Coons runs an IT Management company called Hyperion Works.

He said fiber would revolutionize the way his clients store and access data.

“With faster internet connections, it relieves them of the necessity to maintain that in-house," Coons said. "They can put it out on the cloud and they don’t have to maintain all that but they have the same super-speed access to it.”

There was buy-in from all the city leaders as well. They even made a promotional video. And their efforts paid off.

In 2014, the Phoenix metro area and seven others were chosen for new development. Contracts were drawn and agreements were signed for the use of right-of-ways. But then just last month, Alphabet suddenly announced it’s halting the Google Fiber expansion.

Fiber Halts New Operations

One reason for the change in plans was cost. It can be expensive to dig up streets and sidewalks to lay the miles and miles of cable.

On an earnings call shortly after the announcement, Alphabet CFO Ruth Porat reflected on the ambitious project.

“As we reach for moonshots that will have a big impact in the longer term, it’s inevitable that there will be course corrections along the way," Porat said.

There were layoffs at Google Fiber and the CEO of the project stepped down. As for the future, it looks like Google will focus less on wires and more on wireless.

This summer, it announced plans to acquire WebPass, a wireless point-to-point internet provider. The thinking is wifi and fiber could be integrated to cut costs.

Connectivity Becomes A Necessity For Cities

For the time being, cities that were banking on Google to speed up their economies will have to wait.

Hank Lucas is a professor of information systems at the University of Maryland.

Lucas said in today’s competitive landscape, offering fast internet has become an essential service.

"I think it’s the kind of thing that could be a deal breaker," Lucas said. "So that you might have roads and you might have other services, but if you lack the kind of internet connectivity that people expect I think it could be the deciding factor in a company deciding to locate in another city.”

Phoenix Mayor Greg Stanton was disappointed by the news, but said the process has yielded some positive results.

“If Google was, in part, doing this to motivate others to move forward with their high speed internet, my attitude is 'great,'" Stanton said. "Because overall, it’s been a good thing for the city of Phoenix. Greater competition is a good thing and I think that we are providing much faster service.”

Granville said they’re moving forward, but they haven’t given up hope. “As we dig up our streets and dig up our pipes under the ground, we’ve been laying Fiber. Not because we know what we’re going to do with it,” but so they’ll be ready, he said, if Google or any other provider comes calling again.

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