Google Brings Quirk And Clout To New DC Digs
A Google Fiber display is shown at the Google office in Washington, D.C. Photograph by Andrew Harrer — Bloomberg via Getty Images

Google Fiber Still Expanding But More Slowly Than Ever

Mar 29, 2017

Google Fiber, the search giant's effort to provide super fast Internet service to consumers, has had its share of mistakes and missteps. The 7-year-old subsidiary, now under Google's parent, Alphabet, never met its early goal of quickly wiring up millions of homes. And more recently, the unit has cut employees and curbed expansion as it looks to cut costs.

The broadband push was once seen as Google's effort to take on the entrenched cable and telecom carriers and perhaps scare them into offering faster Internet service. But those hopes have long faded, as Google failed to find a way to reduce the high cost of wiring homes and speed up the bureaucratic approval process for laying cables across neighborhoods.

Now the industry is debating whether Google's fiber effort is just paused temporarily or perhaps on its last legs, after rumors of a possible spin off last year. Whatever the case, Google Fiber is facing a huge test.

Google has stopped adding new cities as part of its original service. But it is expanding within its current footprint of nine cities, adding service for Raymore and Overland Park near Kansas City this year, for example, while canceling a small number of customer orders in other parts of Kansas City.

Meanwhile, Webpass, the wireless home broadband provider Google Fiber acquired last year, remains in growth mode by beginning service in Denver last month and expanding to Seattle later this year. Operating independently of other Google Fiber efforts, Webpass sends Internet service over the air, avoiding the expense of wiring homes. But so far it only makes sense to connect large apartment buildings using the wireless technology. Google is studying how to expand wireless service to individual homes as well.

On Monday, longtime cable analyst Craig Moffett wrote that he considered Google's fiber effort nearly dead after looking at the latest filings that the service is required to make with the U.S. Copyright Office that discloses the number of paid video subscribers. Google Fiber customers can add traditional cable TV service along with fast Internet offering if they desire, though most opt only for the Internet.

Get Data Sheet, Fortune's technology newsletter.

Looking at seven metro areas included in the Google (googl) filings, from the service's oldest market in Kansas City to its more recent roll outs in Nashville and Duluth, GA, the total number of video subscribers increased 58% to about 84,000 in the second half of 2016 from a year earlier. That is down from 79% growth for the same period of 2015.

But almost all of the growth was in the company's original Kansas City market, Moffett noted. Newer markets grew much more slowly with Stanford, Calif., adding just five video subscribers in six months, for example.

"It is hard not to read this latest Copyright Office video data as suggesting that Google’s interest even in its existing markets has cooled considerably," Moffett wrote. "The story of Google Fiber seems more or less over. 'And they all lived happily ever after. The End.' Fade to black."

Google, for its part, denies that the service is on the decline. More users are picking just Internet service and getting video from Internet services, sometimes called over the top streaming. Those who still want cable often opt for cheaper bundles with fewer channels, known in the industry as skinny bundles, Google said.

"We started Google Fiber to make the Internet better," Google Fiber said in a statement. "Our super fast service is currently available to subscribers in 9 metropolitan areas, with 3 more under construction or planned. Demand for Fiber speed continues to grow, as more consumers move toward over-the-top streaming and skinny TV offerings."

The video subscriber numbers released didn't include Google Fiber's service in the Raleigh-Durham area of North Carolina. And the newest markets, Atlanta, Charlotte, and Salt Lake City, have opened for sign ups, but Google has yet to report numbers for those.

For more on Google Fiber's struggles, watch:

And even the entire video snapshot is decidedly incomplete, since most fiber subscribers only pay for the fast Internet service. Analysts estimate the number of total broadband subscribers at five to 10 times the number of video subscribers. The ratio could be increasing because demand for pay TV, in general, is shrinking because of competition from Internet video services like Netflix (nflx), Hulu, AT&T's (t) DirecTV Now, and even Google's own YouTube TV.

Last year's layoffs came as Google moved away from its original plan to wire homes with fiber optic cable. In February, the company brought in a new CEO, Gregory McCray, who had been running Aero Communications, a contract installer of wireless networking equipment. His expertise will be highly relevant as the fast Internet service tries to shift to a wireless footing.

But Google doesn't have unlimited time. The major wireless carriers and even some cable companies are all racing to deploy next generation 5G wireless service. The new technology, which won't be ready for consumers for another few years, makes even gigabit speed wired Internet service look slow.

Whichever industry wins the race, one thing seems clear. The future will be wireless.

FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.

Quotes delayed at least 15 minutes. Market data provided by Interactive Data. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: http://www.djindexes.com/mdsidx/html/tandc/indexestandcs.html. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions