Carriers Covet Googles Ad Revenue

By Don Reisinger  |  Posted 2010-02-18 Print this article Print

5. Advertising is Google's domain

Google is unwilling to share the advertising revenue it generates from mobile phones. Of course, Google has no obligation to do so. But carriers believe that since Google's customers are accessing the Web with the help of their networks, they should see a return on some of the revenue Google is able to generate in that way. It's a tough sell. And carriers know they probably won't get what they want.

6. The retail landscape is changing

Carriers are having a tough time with Google's decision to sell its Nexus One smartphone on the Web. Historically, the mobile market has dictated that customers who want to buy phones need to do so at a carrier's store or through its Website. Moreover, those carriers won't offer an unlocked version, which would allow the customer to go to the carrier of his or her choosing. Google has. By doing so, the online giant has given users the ability to choose where they would like to take their desired phones. It's great for those consumers, but it's a scary prospect for carriers. Choice cuts into the mobile carrier's bottom line.

7. Google has begun network efforts

Google plans to offer a 1G-bps network to between 50,000 and 500,000 people around the United States in the coming years. And although that network is designed to compete with networks currently being offered by ISPs, it could cause some trouble for mobile carriers as well. If Google is able to make its network profitable, it might look into other areas where it could deliver Web connections to customers. That could come to mean ubiquitous WiFi services or maybe even an alternative to current mobile services. Carriers should be deeply concerned about Google's desire to become a network provider.

8. It doesn't want to share

Carriers are fully aware that Google hates to share any revenue that it generates. But what they're most concerned about is that it doesn't want to share, in general. Their business models are based on the idea of sharing. They sell a manufacturer's phone and then reap the revenue that phone generates in plans and other fees. In essence, the manufacturer is taken totally out of the equation after the initial sale of its devices. But Google is different. Its software generates advertising revenue that carriers can't touch. The more money Google makes, the more power it will wield. It's a scary proposition for carriers if they can't find a way to get some of that revenue for themselves.

9. Google's history repeats itself

Looking back, Google has a history of dominance. The company typically breaks into markets with something new and unique and capitalizes on every chance it gets. In many cases, that has helped it increase its influence to a point where the competition feels smothered. Carriers are worried that Google will follow the same strategy in the mobile space. They should be.

10. Time is running out

Carriers need to address their Google issues before it's too late. The longer carriers allow Google to run roughshod over the mobile market and significantly change things up, the sooner the company will revolutionize the way that industry operates. Of course, a revolutionized mobile industry would be good for customers, but for carriers, it could be disastrous.

In the meantime, keep a close eye on Google's interaction with mobile carriers. It should be fun to watch.

Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Since then, he has written extremely popular columns for, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at

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