Google shakes another tree

Written by on January 23, 2015 in Opinion with 0 Comments

Shaking the treeGoogle is looking more and more like a major network operator in the making every day, well certainly a virtual one. It has never come out openly in having aspirations of becoming a network operator but it keeps doing things that give you the impression it is.

As far back as 2008 when Google entered the bidding for 700Mhz spectrum in the USA, its ‘keeping them honest’ reasoning was noble if not a little unusual, especially when you consider the vast sums of money it was playing with. Google said then that it participated in the wireless spectrum auction not with the goal to win, but to help drive bidding high enough to ensure that open-access rules it had pushed for would be adopted.

It claimed then its top priority heading into that auction was to make sure that bidding on the so-called ‘C Block’ reached the $4.6 billion reserve price that would trigger the important ‘open applications’ and ‘open handsets’ license conditions.

Google had previously urged the FCC to adopt conditions requiring whoever operates the network to allow any device or application to connect to it. Verizon winning that auction then had to build and operate the network and open it up to others, including Google and devices running its Android mobile platform.

Eyebrows were raised again when Google asked US communities to apply to be the first recipients of its gigabit Google Fiber service. 1100 communities applied and in 2011 Kansas City, Kansas was selected as the first city to receive Google Fiber. In 2013, Austin, Texas and Provo, Utah were announced as expansion cities for Google Fiber in April 2014. In February 2014, Google announced it had “invited cities in nine metro areas around the US (34 cities altogether) to work with us to explore what it would take to bring them Google Fiber.”

Google is building a substantial customer base where it rolls out Fiber so it can only be presumed it is acting as a network operator already, plain and simple. It should not have been a shock to hear rumors this week, from the Wall Street Journal no less, that Google had brokered wholesale deals with Sprint and T-Mobile US with a view to launching its own mobile services.

Presumably that means it is looking at becoming a mobile virtual network operator (MVNO) as well. As Sprint and T-Mobile lag well behind Verizon and AT&T in size, they were probably more conducive to allowing Google into their space to build up business, even at wholesale level – especially if it could impact the two biggest players.

Whereas most MVNOs target market segments that the network operators don’t bother with or are unable to service, Google could have much bigger aspirations. Who’d have predicted the impact and success of Android in the mobile device space when it was first mooted?

Google also has the capacity to ‘subsidize’ its own operation and could, if it chose to, offer very attractive plans that could start a price war. Not that Sprint and T-Mobile would necessarily mind as they would be guaranteed the wholesale revenue, much of which could come from churning Verizon and AT&T customers.

Of course, this is all hypothetical, and Google could be just ‘stirring the pot’ like it did with its Project Loon balloon Wi-Fi base stations and Street View data gathering exercises. On the other hand, it would provide the ‘last mile’ in its bid for worldwide domination of data collection and customer intelligence. Owning the customer has never seen so much potential return.

Of course, as we get closer to being connected all the time and with many connected devices being portable, having access to cellular infrastructure would be the perfect complement to Google Fiber and Nest, the home aggregator of data. Or is Google simply shaking another tree to see what falls out?

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About the Author: Tony is a freelance writer, regular speaker, MC and chairman for the telecoms and digital services industries worldwide. He has founded and managed software and services companies, acts a market strategist and is now Editor of DisruptiveViews. In June 2011, Tony was recognized as one of the 25 most influential people in telecom software worldwide. .

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