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By Hayley Axford
Google has confirmed that it will enter the wireless carrier business in a small-scale effort. The announcement was made at the Mobile World Congress event that was held in Barcelona. Google said that it will soon sell data plans for smartphones and tablets in the United States and will work with US carriers in order to improve its service. The announcement confirmed media reports from January this year, that the company intended to enter the telecoms market. Google is one of the world’s five most popular websites, with a search engine that offers specialized searches through blogs, catalogues, videos, news items and more.
This announcement could cause a stir in the business which has been long controlled by Verizon Communications Inc., AT&T Inc., Sprint Corp. and T-Mobile US. Analyst, Bill Menezes said that anytime there is a new entrant with the resources and imagination of Google, “it most definitely could shake up the market”. During his presentation at the wireless show in Spain, Google Inc’s Senior Vice President of Products, Sundar Pichai downplayed the alleged competitive threat that the company would pose to other players in the market. “We don’t intend to be a network operator at scale, our goal here is to drive a set of innovations which we think the ecosystem should evolve and hopefully get traction”, said Pichai. With the planned network at “small scale”, this means that the service will likely only be available in limited areas and possibly only to a limited set of users. He added that the services would explore ways to make Wi-Fi and cellular networks to work together seamlessly.
Pichai compares Google’s planned services with wireless connectivity to its launch of its own line of Nexus smartphones, which he noted was not to compete with other smartphone makers, but to introduce innovations in mobile hardware.
Google plans on being a “mobile virtual network operator” (MVNO), which will see it leasing space on an existing system. An MVNO buys wireless spectrum from another company, like AT&T and then rebrands/repackages the service for users. While Google has not revealed its wireless partners, media reports have speculated that Sprint Corp. and T-Mobile US Inc. could be on the list. Neither of the two carriers has confirmed these plans. It is believed that if these companies sell Google access to their wireless networks, it would help Sprint and T-Mobile to recoup some of their extensive investments. “This raises another tension point in the new complex friend-and-foe relationship between Google and operators. You have to wonder what the market-wide impact will be,” said Rajeev Chand, Head of Research at Rutberg & Company, an investment bank which focuses on the mobile industry.
Pichai said that Google is also working on a service to compete with new payment platforms from Apple Inc. and Samsung Electronics Co. The new Android Pay service will enable other companies to tap into the software platform to help to make the purchasing of items simpler on smartphones and tablets.
The plans are a clear indication that Google is more than just selling advertising and services over the internet, but it is influencing how access to the internet is delivered. “I think we’re at the stage where we need to think of hardware, software and connectivity together,” Pichai said.
Google has said that more will be revealed over the coming months.
