Why Is Google Entering the Wireless Business?

Does a free spirited company like Google really want to enter a regulated industry where the costs of gaining and maintaining position are enormous, the risks great and the potential benefits smaller than any other business it is in?

Um, no. At least, not unless it believes it has to do so.

Google, Facebook, Amazon and others have no real interest in becoming telecoms. But what they do see is that they are dependent on the telecoms to increase their scale and reach. And their concern is that the telecoms have become an impediment to that potentially glorious future.

So they are pushing the phone and cable companies to invest more in innovation and in speed. And to do so without imposing unnecessary costs on customers that will slow their growth.

Google's move, as the following article explains, is both a goad and an implicit threat. Because as outraged as the telecoms are that the internet will now be regulated like a utility rather than their personal playpen, that threat is nothing compared to what will happen if the big tech companies decide that the telecoms are hopeless and that they, the techs, have to enter the wireless market for real. JL

Daniel Thomas, David Crow and Murad Ahmed report in the Financial Times:

Google’s decision to enter the wireless business is the latest in a string of attempts to force the telecoms industry to speed things up, be more innovative and introduce new features. However, there is the credible threat of doing something bigger, if Google felt it had to.
Google is launching its own mobile network in the US, threatening to become a powerful competitor to telecoms groups unless they move quickly to support its ambitious efforts to improve internet access globally.The mobile launch comes with the internet juggernaut increasingly frustrated at the slow pace of innovation at incumbent telecoms companies, which it feels is preventing it from providing new services in established markets while leaving unconnected users around the world out of reach.
The US ranks below many European countries for broadband speed and affordability, a situation some analysts say could constrain Google’s business model, which relies on getting as many people as possible online in the hope that they will then use its services.
The company hopes that by showing customers that better services are possible they will demand more from established operators.

The network operations would be small but significant enough for traditional mobile operators to be able to learn from any good ideas, according to Sundar Pichai, Google’s senior vice-president of products.

Speaking on Monday at the Mobile World Congress in Barcelona, he pointed to parallels with how Google had developed its own smartphones under the Nexus brand, which were manufactured by other handset makers.

Google would likewise use the networks owned by existing groups to launch its services as a so-called mobile virtual network operator or MVNO. He did not say if the plans would extend outside of the US.
“We have always tried to push the boundaries of what next. It is a project we are doing,” he said in a speech.
“We don’t intend to be a network operator at scale,” he said. “We will do it at a small enough scale and hopefully people see what we are doing and carrier partners, if they think ideas are good, can adopt them.”
Mr Pichai said that Google did not see itself as a threat, but rather a test bed for ideas about how networks could work more closely with its devices and operating software.

Telecoms groups back giving users ‘mobile digital identity’Plans to bring together passwords and authentication for internet services on to a single platform are being developed by global telecoms groups, as they look to cement the mobile phone as the centre of digital life

But reports that Google has held talks with the two smallest US wireless carriers — Sprint and T-Mobile — about an MVNO, had already prompted a reaction from big US mobile operators.

Earlier this year a senior executive at Verizon, the biggest US mobile operator, warned the resulting increase in traffic from any deal with Google would put strain on the infrastructure of the smaller operators and risked leaving all customers on the network with a substandard service.

Analysts have questioned whether, despite its protestations, Google could end up posing a threat to network operators by providing services that would disrupt traditional business models.

“What we think it’s trying to do is push the existing carriers to speed things up, be more innovative and introduce new features,” said Martin Garner, analyst at CCS Insight. “However, there is the credible threat of doing something bigger, if Google felt it had to.”
“Google’s words were cautious,” said Julie Ask, an analyst at Forrester Research. “[But] they can learn a lot by trying even if being a [mobile virtual network] doesn’t turn into a huge revenue opportunity for them.”Google’s decision to enter the wireless business is the latest in a string of attempts to force the telecoms industry to improve standards.

The search group is also rolling out its super fast Google Fiber broadband product in more than 30 cities, prompting companies such as AT&T to follow suit.

Mr Pichai said Google’s other projects to provide mobile connections to people were progressing quickly. He said the first flights of solar-powered gliders designed to provide mobile signals to rural areas would begin in the next few months.

These drone flights — dubbed Project Titan by Google — will work alongside the group’s existing plans to fly large hot air balloons to create a “a mesh of floating cell towers”.

Google is working with three network operators — Vodafone, Telefónica and Telstra — to begin large-scale testing of the balloons, which Mr Pichai said could stay airborne for six months to provide high-speed 4G connectivity in areas where it was difficult to build traditional cellular masts.