Google Dials Back Fiber Rollout

In another indication of a push towards blazing fast wireless connectivity, Google (NASDAQ: GOOG) indicated last month that is dialing back its fiber-to-the-home rollout.

Some have suggested that this "moonshot" bet was too costly, too messy or not a potential 10x outcome for the company.

Yet, based on the 3Q earnings call, it appears to me that Google is still very much interested in delivering connectivity but it will be doing it wirelessly.


And then my second question is either for Ruth or Sundar. Can you just talk about the decision to pause efforts for Google Fiber? I'm wondering, was that decision more about financial discipline, as you I think explained, Ruth, in your prepared remarks for the Other Bets, or does it more have to do with the shift to wireless Internet technology or point-to-point wireless, which ultimately can take the place of a Fiber or facilities-based infrastructure over time.

Ruth Porat - Alphabet, Inc.

In terms of Fiber, the impetus for it was really about the opportunities that we see to focus on innovation, and what does that mean if the objective with Other Bets is really these 10X opportunities. And when you go back to the initial impetus for creating the business, it was the founders' view that there's a sizable opportunity given the need for abundant connectivity on networks that are always fast and always open, and we do continue to be committed to that vision.
The team had some important breakthroughs in new technologies. You noted the most important in our view, all that we're doing with wireless, but also technologies that are key to implementation. And we believe that both of those, a number of things they're doing enhance both our effectiveness and efficiency. And so we wanted to focus on the potential with these efforts before we re-accelerate deployment. And it was about ensuring that we can take advantage of those before again pushing forth.
We were very active in a lot of cities in the third quarter alone. We rolled out four new cities, so that brings us to 12 cities across the U.S. where we're deployed, in construction, or in development, and we're making great progress in those cities. We remain very committed to growth across those cities. And then we also have a presence in six cities with our wireless acquisition, Webpass. So we're pausing for now our work in eight cities where we've been in exploratory discussions. But very much to your question, it's to better integrate some of the technology work we've been developing, and there's more detail on the cities on the Fiber side to the extent you want to go into those.

So the Google team had some interesting technology breakthroughs. It is now a member of CORD - Central Office Re-architected as a Datacenter -- too, along with Radisys (NASDAQ: RSYS) and others.

Given the industry push to SDN/NFV, 5G etc, the technology is evolving to offer high-speed connections via a mobile network. It seems to me that this would be the preferred method for webscale internet giants because they don't have to mess around with putting fiber in the ground via microtrenching. So it can deliver more pervasive high-speed connectivity, with less business risk and capex spend to manage a network of underground fiber.

Reading the tea leaves here, I think Google's cloud networking ambitions could help further accelerate CSPs efforts to virtualize their networks to avoid being disrupted by the webscale players like Google.

This, of course, would be music to the ears of small software players like RADCOM (NASDAQ: RDCM) who are perfectly positioned with a unique, cloud native VNF service that CSPs are lining up to buy. The company is currently engaged in 9 Tier-1 CSP trials, four of which are accelerating after a public endorsement by AT&T (NYSE: T) discussing the benefits of Radcom's MaveriQ solution.

Disclosure: I own RDCM shares.

Mike Arnold

full-time investor searching for talented operators, clean capital structures & scalable growth. no cigar butts or conventional wisdom. // hiker. hooper. writer

Portland, Oregon