Alphabet Inc.'s Google Fiber set out several years ago to change the broadband business, and in some respects, it succeeded. But in certain markets — most recently Louisville, Ky. — the company has learned just how hard change can be.
The company recently announced that it would be leaving Louisville less than two years after it first launched high-speed internet service in select neighborhoods of the city. Google Fiber attributed the decision to a failed experimental construction method. While broadband analysts deemed the announcement an embarrassment for the tech giant, they also noted Google Fiber succeeded in its larger goal of spurring a wider rollout of faster broadband speeds.
Increased competition
"If you look at the Louisville market, it's more competitive than it was when Google announced it was moving in," Kagan analyst Neil Barbour said in an interview, noting that AT&T Inc. has expanded its fiber footprint in the area and now offers gigabit speeds.
According to MediaCensus data from Kagan, a research group within S&P Global Market Intelligence, AT&T has also succeeded in attracting tens of thousands of new broadband subscribers in the almost two years since April 2017 when Google Fiber said it was coming to Louisville. Cable operators in the designated market area, including Charter Communications Inc. and Comcast Corp., have also increased their speeds to approach or exceed 1 Gbps.
"Google got into the business several years ago because they saw a problem that they wanted to solve," Jeff Kagan, an independent wireless, telecom and pay TV analyst, said in an interview. "The problem was existing internet providers were not offering fast enough internet speeds."
Kagan said Google Fiber was a way to "capture the attention of high-speed internet providers and encourage them to roll out higher speeds."
With gigabit speeds now more common among various operators, Barbour said it makes sense for Google to leave.
"With that much competition, Google probably does not see a clear path to the kind of market share that would justify more investment," said Barbour, suggesting that Google may make a similar decision in some of its other Google Fiber markets.
Poor construction
According to a Google Fiber blog post, the company's exit from Louisville has less to do with competition and more to do with poor construction.
"We were trialing a lot of things in Louisville, including a different type of construction method — namely, placing fiber in much shallower trenches than we've done elsewhere," the company said in its post.
The trenches were just one-inch wide and a couple inches deep in some cases, an installation technique known as "nano-trenching." The fiber was then covered with a rubber-like sealant rather than asphalt.
Between the shallow trenches and the rubber sealant, some neighborhoods saw fiber lines become exposed over time.
"The real problem was the sealant was popping up. It wasn't staying flat and smooth," Louisville Metro Councilman Brandon Coan said in an interview, adding that the synthetic sealant ultimately proved "an insufficient way to seal the wire in the road."
Initially, Coan said Google responded to the problem by promising in the summer of 2018 to tear out the sealant and recover the trenches with asphalt.
"They did not finish doing that," Coan said. "I don't think they ripped out the sealant everywhere and paved it or filled in the hole or whatever you want to call it, but [as] part of them wrapping up their business here, we're going to insist on that at the very least — them leaving the streets in as good or better shape as they were when they found them."
Google Fiber declined to comment beyond its blog post, but Coan said the company has committed to working closely with the city on the next steps.
Kagan said Google Fiber's problems in Louisville are not wholly unique to that market, noting that the company has also experienced similar issues in other cities where it relied on nano-trenching. Kansas City customers, for instance, lost Google Fiber service during a snowstorm, while Nashville, Tenn., customers lost Google Fiber service when a city repaving project exposed lines buried in shallow trenches.
While the company may have succeeded in spurring greater broadband competition overall, Kagan said these reports paint a negative picture.
"If they had pulled out initially after all the big internet service providers started cranking up their speeds, I would have said mission accomplished," the analyst said. "But now it's like they are failing. It's not something a big strong brand name wants to be associated with."
