Google's Cellular Bluff Isn't Going to Work

By

Does Google believe in big commitments beyond its own search engine? The company announced it would be a mobile virtual network operator (MVNO) at Mobile World Congress, but reports say the company is only supporting one phone.  Really? It's not like Google doesn't have the cash.

Apparently Google is going to "experiment" with being a MVNO to show what is possible, using the Nexus 6 to demonstrate how Wi-Fi and cellular calling can play together.  Reports say either Sprint and/or T-Mobile will be the carrier in the background to support the effort and there are no plans to go big by competing with AT&T or Verizon.

Google observers say the company is doing this to nudge carriers to get them moving in the right direction, with Google Senior VP Sundar Pichai stating, "Our goal is to drive a set of innovations we think should arrive, but do it on a smaller scale, like Nexus devices, so people will see what we're doing." 

Analysts are pointing to Google Fiber as the example of the company "driving" innovation, improved service quality and price pressure.  The company's gigabit fiber plans have driven AT&T to deploy gigabit services in Austin, while AT&T and Frontier have turned up fiber deployment plans in Portland and Raleigh-Durham in apparent response to Google announcements.

I am not buying this particular bluff at this time.  I think wireless carriers are going to continue to do what they want without worrying about Google's limited MVNO sideshow unless some crazy number of people sign up for the service while dropping their existing carrier.  AT&T and Verizon are already in the pits fighting Sprint and T-Mobile over more aggressive pricing and better plans, so there's very little in terms of either service or solutions that Google could offer over-and-above what consumers already get by buying an Android phone.

Last year Google hauled in $66 billion. It is sitting on $64.4 billion in cash and pulled in free cash of about $2.81 billion in the fourth quarter of 2014. At the close of business on March 6, 2015, T-Mobile U.S. was worth $26.5 billion while Sprint closed out at $20.7 billion.  Google could buy either cellular carrier outright and not break a sweat, then cover any losses and network upgrades out of existing cash flow. 

The paradox here is that if Google did buy either number 3 or 4 in the U.S. wireless market, it would probably stir up lobbying and anti-trust arguments and all kinds of other smoke that would ultimately force large carriers to kick their Google search engine addiction/relationship, and I just can't see the company being that kind of disruptive.  

What would be more interesting is if Google bought a smaller overseas wireless carrier or two, enough to experiment and nudge with, but not enough to trigger a panic rush to Microsoft Bing by the carriers of the world.  Google would effectively buy a full seat at the cellular world's table, rather than merely renting one by operating an MVNO.  And it's not an impossibility; Softbank has a portfolio including broadband and effective ownership of Sprint.

Certainly Google needs to move beyond an experimental dabbling here and there to nudge carriers forward.  At some point in time, Google will have to take an ownership stake in cellular if it truly wants to steer the industry toward its goals.




Edited by Dominick Sorrentino

Contributing Editor

SHARE THIS ARTICLE
Related Articles

Coding and Invention Made Fun

By: Special Guest    10/12/2018

SAM is a series of kits that integrates hardware and software with the Internet. Combining wireless building blocks composed of sensors and actors con…

Read More

Facebook Marketplace Now Leverages AI

By: Paula Bernier    10/3/2018

Artificial intelligence is changing the way businesses interact with customers. Facebook's announcement this week is just another example of how this …

Read More

Oct. 17 Webinar to Address Apache Spark Benefits, Tools

By: Paula Bernier    10/2/2018

In the upcoming webinar "Apache Spark: The New Enterprise Backbone for ETL, Batch and Real-time Streaming," industry experts will offer details on clo…

Read More

It's Black and White: Cybercriminals Are Spending 10x More Than Enterprises to Control, Disrupt and Steal

By: Cynthia S. Artin    9/26/2018

In a stunning new report by Carbon Black, "Hacking, Escalating Attacks and The Role of Threat Hunting" the company revealed that 92% of UK companies s…

Read More

6 Challenges of 5G, and the 9 Pillars of Assurance Strategy

By: Special Guest    9/17/2018

To make 5G possible, everything will change. The 5G network will involve new antennas and chipsets, new architectures, new KPIs, new vendors, cloud di…

Read More