The Art Of The Nudge: Why Google Wants To Be A Wireless Carrier

Author

Robert Hof, Contributor

March 3, 2015

Confirming rumors circulating for some time, Google today said it will indeed launch its own wireless Internet service later this year. But the Internet giant said it plans to do so on a small scale, to prove there’s a better way to combine free WiFi-based phone and data services with cellular networks.

Sundar Pichai, Google’s senior vice president of products, told an audience at the Mobile World Congress conference in Barcelona that Google will announce more details of its plan to become a Mobile Virtual Network Operator, or MVNO, offering service for smartphones under its own brand. Recent reports said Google will work with T-Mobile and Sprint to provide cellular network coverage in cases when WiFi isn’t available, even to the extent of resuming a call on those networks if it gets dropped.

It’s yet another in a long line of moves by Google to push often recalcitrant industry players along. That includes its Android mobile software (which arguably has become a profit center of sorts if you count some $10 billion in gross app revenues), its Nexus phones and tablets (which surely don’t bring in much if any profit), its fiber broadband service in several cities (probably the closest analog), all the way back to its 2008 bid for radio spectrum (which it lost, perhaps purposely, to get Verizon and others to buy it and eventually expand wireless Internet access).

While Google at times in the past has been more cagey about its intentions when it introduces products and services outside its core, this time it was quite clear about why it’s doing this. It isn’t trying to become a large-scale wireless operator, Sundar Pichai, Google’s senior vice president of products, told attendees:

“We don’t intend to be a network operator at scale. We are working with carrier partners. You’ll see our answer in coming months. Our goal is to drive a set of innovations we think should arrive, but do it a smaller scale, like Nexus devices, so people will see what we’re doing.”

In other words, it’s the latest example of how Google has become a master of the nudge. All of those moves are intended to push software developers, hardware partners, carriers, and competitors to improve their products and services, because the better the hardware, software, and Internet access they provide, the better Google’s advertising business does.

This time, there’s good reason to believe that Google’s move could spur other wireless operators to improve their networks, in particular to use technologies such as WiFi that can bring the cost down for the next few billion people who are not online yet. Carriers such as Republic Wireless have already started doing that, but they remain outliers in an industry still based on relatively high monthly fees for all-the-time cellular network access. “Similar to GOOG Fiber, we expect GOOG’s wireless service to focus on driving innovation, improved service quality/speed, and pressure pricing across the industry,” Macquarie Capital analyst Ben Schachter said in note to clients.

Especially in the cities so far where Google offers fiber Internet service, the company could fairly easily set up a citywide WiFi network to provide low-cost Internet access. Google Fiber is already in Kansas City, Provo and Austin, with plans just announced in February for 18 more cities in four areas: Atlanta, Charlotte, Nashville, and Raleigh-Durham. Others under consideration are Phoenix, Portland, San Jose, San Antonio and Salt Lake City. And all that is in addition to its plans, called Project Loon, to use high-altitude balloons to bring Internet service to more remote areas.

Google’s kick-in-the-butt approach to pushing wireless operators to up their game isn’t the only one. Facebook is also pushing network operators, though CEO Mark Zuckerberg, also speaking in Barcelona today, sought to put a friendlier spin on its efforts, which include using drones to provide Internet service to underserved areas. “We can help because Facebook is one of the primary apps people want to use, so therefore it drives data usage and means we can effectively partner with operators in order to accelerate the growth of their businesses,” he said. ”The reason why we’re here in Barcelona is because the folks who are here, who are part of this industry, are the ones leading the charge to connect everyone in the world and have been for decades. There’s a long legacy and history and sense of mission in the industry. And that’s why these folks are doing all the work to lay the fiber and build the towers to actually get this done.”

Still, lots of questions remain about Google’s plans, of which it may reveal more at its I/O software developers conference in May. For one, Google would have to provide service in enough cities to constitute a real threat to the largest wireless operators, Verizon and AT&T. Also, it would have to figure out a way to provide customer service, which remains a challenge even for experienced operators. Not least, it will have to offer the service at a low enough price to interest consumers, and thus force the hand of traditional wireless networks.

All this adds up to the reality that most of us shouldn’t expect to get cheap wireless service from Google anytime soon.

google internet service


This article was written by Robert Hof from Forbes and was legally licensed through the NewsCred publisher network.

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