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Alphabet's cost cutting on display as Google Fiber rolls out in Alabama

  • Google's parent starts delivering fast internet by leasing network access from a local utility.
  • Alphabet has recently changed its plans for Google Fiber in San Antonio.
  • Google Fiber still lists eight "potential cities" on its website following a pause last year.
Ruth Porat, CFO of Alphabet, at the New York Economic Club on May 22, 2017.
Adam Jeffery | CNBC
Ruth Porat, CFO of Alphabet, at the New York Economic Club on May 22, 2017.

Google Fiber, Alphabet's fast gigabit internet service, is now available in Huntsville, Alabama. But instead of laying fiber-optic cables, Google is using fiber from Huntsville Utilities, a city-owned provider of water, electricity and natural gas.

It's an example of CFO Ruth Porat's cost-cutting efforts at work.

In October, the Access fiber business chose to "pause" its expansion efforts in some cities and the company's leader Craig Barratt stepped down, replaced earlier this year by former CenturyLink executive Gregory McCray.

"Leasing the infrastructure in Huntsville rather than building from scratch allows us to bring Google Fiber to even more people, and even faster," Caroline de Gantes, Google Fiber's head of business operations in Huntsville, wrote in a blog post Tuesday. The service is available in the northern part of the city.

Additionally, Access has opted to use point-to-point wireless internet to connect people in certain cities in line with the approach of internet service provider Webpass, which Alphabet acquired last June. Last month Alphabet said it would be starting construction for fiber service in Louisville, Kentucky, although the company will be partially drawing on Webpass' wireless technology, according to TechRepublic.

In Huntsville, the blog post said, "Google Fiber is the city's first tenant and will lease part of the network with a non-exclusive arrangement, which allows other providers to lease fiber from the city as well."

Porat told financial analysts in October that Fiber's costs in the third quarter stood out as the primary driver of the $324 million in capital expenditures from Alphabet's Other Bets business unit, which includes Access along with Nest and Waymo.

Google Fiber is also coming to San Antonio, although Alphabet has decided to decrease the number and size of facilities it needs to install around the city in order to provide the service, according to the San Antonio-Express News.

More than six months after the pause, the Google Fiber website still lists Dallas, Jacksonville, Florida, Los Angeles, Oklahoma City, Phoenix, Portland, San Jose and Tampa as "potential cities."