Google as Phone Carrier Theory Mostly Well-Received

 
 
By Clint Boulton  |  Posted 2011-01-17
 
 
 

eWEEK started the new year by skewering the popular, but quite speculative notion that Google could become a phone carrier, offering these five reasons why this wouldn't happen.

To say nothing about the costs associated with such a move, we believe incumbent carriers, Congress, privacy advocates, consumers and an already competitive market would preclude this high-minded vision.

Several anonymous readers then set out to prove us wrong. Many consumers, it seems, would love the idea as having Google as their carrier.

Some believe the carriers, such as Verizon and AT&T, can use a kick in the pants from a new disruptive entrant in the market. They trust Google more than the carriers, and spat back the tried and true "there is no such thing as too many choices" argument.

But the biggest argument seemed to come down to cost. Most folks believe Google, which already offers its Google Voice application for free, would offer them phone service on the cheap with a Nexus-branded phone lacking carrier bloatware.

One reader wrote:

"Google offers value period! AT&T and Verizon and to some extent the other two small providers are working to keep wireless communications prices inflated. They manipulate prices by shoehorning you into tiered voice, data and text plans. Google will simplify this into one value oriented data stream that will handle all of voice, Internet and text data. And Google will allow you to have an unlocked Android phone that will be sold on any retail store at commodity prices."

Another noted:

"Imagine what Google could bring to the table. First, greatly reduced prices. Imagine a cell phone with 3G & 4G data that costs maybe $20/mo, with the option of a bucket of minutes or pay-as-you-go minutes. Google could do that. Imagine them integrating their Google Voice features into cell phones. (For one, imagine being able to block annoying callers easily) They could bring features that the masses are clamoring for that incumbents refuse to provide. For example, how many of us would like to have the ability to block all callers who either block or do not send their caller ID data?"

We don't know if the respondents are huge Google fans or just so sick of carrier domination or both, but we brought in some analysts to help provide some edification.  

Matt Davis, who covers consumer and multiplay services for IDC, noted that Google would have to prove to shareholders that becoming a carrier would be in their best interest.

"This is highly unlikely to happen," Davis said. Then come the practical roadblocks. Davis pointed to the fact that Google lacks the wireless spectrum necessary to provide mobile phone service.

The company may have had its best chance to become a carrier when the 700MHz spectrum went up for auction two years ago. Verizon swooped in and outbid everyone for it and has now cultivated its 4G LTE network with the spectrum.

Ultimately, he said it would take some serious bandwidth-squeezing by mobile operators to force Google to seriously entertain the notion. 

"As far as building an access network ... dirty, low-margin, hard business. That is not how Google makes their money. They'd be very effective in delivering a strong lobby to the Obama administration and FCC [Federal Communications Commission] to make sure there is enough freedom and openness at the network access layer that they don't have to do that."

But what about Google's Fiber network, the ambitious plan to test a network that brings a speedy 1G-bps Internet service to peoples' homes?

Davis called Google Fiber a stunt, arguing that it was to counter the fixed wireline carriers' argument that building a fiber network was expensive and hard to do. The move was purely designed to show that these carriers have either been incompetent or intentionally restricting bandwidth.

But we're still talking at least $20 billion in infrastructure costs to build out a full network. Buying a carrier such as Sprint, with a market cap of $13.3 billion, or even the struggling Clearwire, might be a better option.

Enderle Group's Rob Enderle noted that carriers might not be able to stop Google if it wants to go the carrier route.

"Google has their own lobbyists now, and the current administration isn't a huge fan of the current carriers while being very pro-competition," Enderle said.

Of course, Verizon and AT&T spend a lot more than Google lobbying the government each year, but Enderle said the government (read: the FCC) might promote a new provider. "Their work with the existing carriers and net neutrality hasn't been very promising, and Google could help them fix that."

Enderle concluded: "For Google the problem is too many fronts and getting too close to being a real monopoly or falling under existing regulation. They aren't huge fans of either, and it is likely those concerns that are holding them back."

There you have it. Anyone still think the Google as carrier notion has some steam behind it?


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