Google, Motorola, T-Mobile a Holy Trinity?

By Clint Boulton  |  Posted 2011-08-18 Print this article Print


I was going to write about how Motorola Mobility's latest legal setback versus Microsoft, but because I woke up in a better mood I'm going to talk about the idea that Google could go after T-Mobile to add a carrier to the mix.

As my eWEEK colleage Wayne Rash noted, the Federal Trade Commission still hasn't decided to approve the license transfer; the DoJ is looking at antitrust ramifications of the proposal and the class-action lawsuits are mounting.

By and large, people don't like the deal, which if it does not pass will be disastrous for T-Mobile, which like Sprint is losing subscribers. It's tough to survive when the majority of people are buying iPhones and Android handsets from Verizon Wireless and AT&T.

So Rash proposes T-Mobile might fall gracefully into the waiting arms of Google. Assuming Googleola does pass the DOJ/FTC acid test, this could be a possibility.

Of course, the $39 billion price tag T-Mobile comes with equals Google's current cash reserves -- before it even consummates the Motorola deal. After, it would be more like $26 billion. Could Google get T-Mobile for, say $20 million, and still be comfortable with $6 billion in cash reserves? That's my toughest pill to swallow, but Rash wrote about what Google would get in return:

In short, it has the opportunity to become the world's first totally integrated information company. Google already controls the biggest trove of information in a single place. It has one means of delivery through Android, another through Chrome and another means of integration through Google Apps. With the acquisition of Motorola, it will have the means to deliver information nearly anywhere. Buying T-Mobile would then be the final step to controlling the means of delivery by controlling the carrier that provides the pipes through which that information is delivered.

And since we journalists like to look for ancillary benefits (such as Motorola STBs boosting Google TV) T-Mobile could offer some fiber backbone to fortify its Google Fiber project, which seems slow going.

There was a time a few years ago when I thought Google would indeed go after Sprint or T-Mobile to bolster Android. Then it turned out it didn't need it.

Android took off in November 2009 with the Motorola Droid marketing campaign, continued with the Droid Incredible, HTC Evo 4G and Samsung Galaxy S devices into next year and never looked back.

Amid this success, the patent wars began in earnest, with suits against Android OEMS Motorola by Microsoft, a settlement between HTC and Microsoft and suits by Apple against HTC, Motorola and Samsung.

Now here we are. I never expected Google would buy one of its core Android OEMs, but the company's weakling patent position pushed it in that direction. Now should Google buy a carrier?

Eh. The regulatory scrutiny Google faces from the FTC and DOJ alone over search deals might make this move close to impossible. Regulators are way more uptight about the telecommunications market thanks to the Baby Bells antitrust fiascoes of the '80s.

I don't think the FCC would allow this deal to pass, but it would pose a lot of interesting what ifs if it did.

Could Google effectively run a telco? Google is already facing questions about whether it would run Motorola objectively without giving it preferential treatment via-a-vis Android.

Would AT&T and Verizon and Sprint be able to accept Google owning T-Mobile and still support Android.

I'm not so sure, so for the time being, let's focus on Motorola. First megamerger first. |

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