Google Cancels Some Fiber Internet Installations in Kansas City

(Bloomberg) -- Google Fiber, the gigabit-speed internet service rolled out by Alphabet Inc., is canceling some installations in Kansas City, the latest setback for the high-profile initiative.

The search giant is sending out refunds to residents that won’t be getting the service they signed up for. The metropolitan area, which straddles the border of Kansas and Missouri, was the first market for the superfast service when it debuted in 2012 and remains Fiber’s largest.

“Although we’ve been working hard to bring you service, we’re unable to build our network to connect your home or business at this time,” Google Fiber said in an email to affected consumers. “Unfortunately, that means we’ll need to cancel your Fiber account.”

Google Fiber once was one of Alphabet’s most trumpeted projects, as it signaled ambitions to go head-to-head with cable and phone companies to offer internet access and bolster its main search business. Since its launch, the company overall has put a new emphasis on financial discipline under Chief Financial Officer Ruth Porat. For Fiber, that has meant scaled back expansion, staffers cut and hundreds of workers shifted to Alphabet’s core web business.

Alphabet’s tamping down of its Fiber goals comes at a time when some in Kansas City are disappointed with the lackluster effect the high-speed service has had on areas such as the local economy, the amount of venture-capital funding or the creation of breakout startups.

Other Bets, the part of Alphabet that Google Fiber belongs to, had an operating loss of $3.58 billion last year on revenue of $809 million. Alphabet overall remains highly profitable.

The company said it will provide refunds on customer deposits, typically $10, within the next two weeks. Those who already have the fiber service can keep it.

Several hundred people, many of whom paid deposits years ago, are affected, said a person familiar with the situation. In markets Google Fiber entered after Kansas City, it was more careful about accepting deposits only for buildings it believed it could connect in coming quarters, the person said, asking not to be identified as the details are private. Fiber is currently in nine locations around the U.S.

It is unclear if the affected group includes low-income customers, who Google had pledged to connect for free.

News of the canceled installations was first reported by Kansas City TV station KSHB.

--With assistance from Mark Bergen

To contact the reporter on this story: Sarah McBride in San Francisco at smcbride24@bloomberg.net.

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Robert Fenner, Edwin Chan