Google Fiber Pauses Expansion Plans After Estimates Show An $859 Million Operating Loss

Once hailed as the future of telecom infrastructure, the high-speed internet branch of parent company Alphabet (GOOG) has fallen significantly short of its original lofty expectations. Google’s 2010 announcement launching Google Fiber aimed to change business and residential broadband connectivity for users all over the country. However, after six years and 1,000 applicant cities hoping to receive Google Fiber, the high speed service is available in just six metro areas: Provo, UT, Austin, TX, Kansas City, MO, Nashville, TN, Atlanta, GA, and Charlotte, NC

Google Fiber Pauses Expansion Plans After Estimates Show An $859 Million Operating Loss

Google Fiber aimed to offer internet connections roughly 100 times faster than the US average. But after spending hundreds of millions of dollars during initial rollouts with minimal results and heavy losses, the company is changing its tune.

Now, Fiber is looking to utilize wireless technology instead of cables to connect homes to the internet. The company will cut costs by leasing existing fiber or encouraging cities to build the networks rather than digging up streets themselves.

Last month, Google Fiber acquired Webpass Inc., a company which uses a fiber-connected antenna to beam internet service to another antenna mounted on the subscription home. According to Webpass executive Charles Barr, wireless offers an opportunity to overcome the challenging economics of building fiber networks from scratch. Google Fiber will soon use fiber for the central network and antennas to connect each home wirelessly to that network rather than fiber optic cable everywhere.

Fiber optic cable is made of glass, and utilizes light to transmit information far faster than copper is able to. Now that Google Fiber is eliminating plans to build hundreds of thousands of miles of fiber optic cable, let’s look at who loses there – and how you can win.

By switching to new wireless technologies and leasing existing fiber optic cable networks, Alphabet will significantly reduce Google Fiber costs over the coming years, meaning you can expect a steady uptick if you’re monitoring GOOG stock, which has risen from 685.2 to 806.59 since swallowing up Webpass Inc. And while that’s great for you as a shareholder, this news is bad for fiber optic manufacturers. By abandoning their original quest to lay fiber optic cable across the country, Google Fiber has now put a significant dent into the demand for fiber optic cable, meaning you can expect to see the companies who produce that cable to see a downturn.

The Capitalist says go with the wireless wave of the future, and trust that Alphabet will make magic happen. Watch this video by Newsy to know about Google Fiber going completely wireless:

More from The Capitalist

5 Steps To An Early Retirement

Oversupply Concerns Causes Oil Prices To Hit A 3 Month Low

Tech History Broken As Yahoo Sells To Verizon For $5 Billion

The statements, views, and opinions of any article, contribution, editorial, or advertisement in this publication are not necessarily those of The Capitalist or its editorial staff, and are not considered an endorsement, sponsorship, or recommendation of any referenced product, service, issuer, or groups of issuers.

This publication provides general information about certain subjects, and should not be construed or taken as advice (legal, financial, investment, tax, or otherwise). Do not construe or take any information in this publication as a solicitation, offer, opinion, or recommendation to buy or sell any securities, bonds, or other financial instruments or to provide any legal, financial, investment, tax, or other advice or service about the suitability or profitability of any financial instruments or investments.

The Capitalist disclaims any liability for the accuracy of or your reliance on any statements, views, opinions, or information in this publication.