Alphabet Inc. (GOOGL) subsidiary Access is further tightening its belt. Earlier this week, the company named a new CEO and moved "hundred of workers" from its Fiber division to Google, another company within Alphabet's fold. Access is also transitioning to a different business model – one in which it provides internet services through wireless.
According to a Wired article, it is still "hellishly expensive" for Google to connect fiber-optic cables beneath the ground to customer homes. So it has petitioned the Federal Trade Commission to free up more wireless spectrum. Technology from Alphabet's acquisition of Webpass last year may help it serve wireless internet at cheap costs. "It's possible the company could one day resume efforts to bring actual fiber into homes if it can figure out a way that costs a lot less money," write the authors of the Wired article. (See also: Alphabet Shifts Strategy With Fiber.)
In a related development, Alphabet named Gregory McCray, a seasoned telecom executive, to the top post within Access. He is a board member at CenturyLink, Inc. (CTL), an internet service provider. Access, which provides high-speed internet access to consumers, stopped expanding to new cities and laid off a substantial part of its workforce last year. (See also: Alphabet Halts Expansion of Fiber Project as Access CEO Steps Down.)
The move can be construed as part of a broader effort by Alphabet to cut down on costs and achieve profitability among its companies. A major part of expenditure in Alphabet's "Other Bets" category was related to Access' expenses to lay down broadband lines. As early as April last year, Alphabet CFO Ruth Porat had said that the company expected capital expenditures related to Fiber to increase as it expanded to new cities. (See also: Four Industries Where Alphabet Hit the Brakes.)