Google’s internet access project may be getting too expensive for parent company Alphabet: Google Fiber is being told to reduce its workforce from 1000 to 500 employees, according to a report from The Information. This comes after reports that Fiber may be looking to cheaper wireless technology to accelerate its subscriber growth.
The Information is reporting that the cost-cutting directive is coming straight from the top: Alphabet CEO Larry Page told Google Fiber chief Craig Barratt last month to reduce the size of his team by 50 percent, according to the report.
Alphabet representatives didn’t immediately respond to a request for comment.
Google first launched its Fiber internet access business in 2010, offering Kansas City residents Gigabit-speed internet access for $70 a month. The company has also been offering a traditional TV bundle to Fiber customers, making the product a competitor to existing cable and telco services.
Google subsequently embarked on an aggressive expansion of Fiber, which is now available in eight metropolitan areas, with a roll-out planned for five additional markets, including Irvine, Calif. and San Francisco. Google said in the past that it was considering bringing Fiber to around a dozen additional markets, including Los Angeles, Chicago, Dallas and Portland.
But subscriber numbers are well below initial expectations, according to the report. At the same time, Fiber has been burning money, which has become more obvious ever since Google organized under the Alphabet umbrella last year. That reorganization resulted in Fiber being separated from Google’s legacy businesses into an “other bets” group that also includes Nest, maker of the internet-connected thermostat. This group has losing a lot of money, to the tune of $859 million during Google’s most recent fiscal quarter.
Recent reports indicated that Google may be slashing Fiber costs by using wireless technology to connect homes to the internet, which could be a lot cheaper than digging trenches to lay fiber-optic cables. In June, Alphabet acquired San Francisco-based wireless internet provider Webpass, which could be key to these cost-savings plans.