It’s official. Though it’s been inferred for a few weeks now, Google Inc. (NASDAQ:GOOGL, NASDAQ:GOOG) has verbally confirmed it is creating a new wireless phone and wireless internet service, and almost certainly teaming up with Sprint Corp. (NYSE:S) and T-Mobile US Inc. (NYSE:TMUS) to do it.
Google insists it isn’t looking to grow this venture to a scale that would take on the two powerhouses already well-entrenched in the mobile phone and wireless internet space, Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T).
If you believe the advent of a mobile Google internet and wireless phone service couldn’t eventually become a real problem for Verizon and AT&T, though, then you may also be interested in buying a bridge in Brooklyn that’s for sale.
Google Wireless Internet and Voice Confirmed
The initiative was confirmed by Google Vice President Sundar Pichai earlier this week at the Barcelona Mobile World Congress trade show. The new project, called “Project Nova”, is reportedly going to use existing cell towers owned and operated by Sprint and T-Mobile, both of which have been waging a price war — one they really can’t afford — against Verizon and AT&T in order to win market share.
Though neither carrier has made a meaningful dent separately, together with Google the trio could be a disruptive force worth worrying about.
And yet, that’s not what Google says it intends. Pichai specifically explained at the Mobile World Congress event:
“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 [on] a smaller scale, like Nexus devices, so people will see what we’re doing.”
It seems benign enough on the surface. It just doesn’t seem plausible.
No publicly-traded company is realistically willing to do something this costly and this difficult just to inspire competitors and their competitors’ partners to start delivering a better customer experience. There must be money in it.
It may not be clear how or when that money will arrive, but Google certainly (and rightly) sees financial gain from unveiling a wireless internet and mobile voice service. And the hint of the end-game may be subtly buried in some of the other information Google shared about what the upcoming service might look like.
A New Paradigm for “Wireless”
Wireless-communications technology experts might be quick to dismiss the idea that Google could ever be a real threat to AT&T or Verizon for a myriad of reasons. One of them is the fact that, even with Sprint and T-Mobile in Google’s corner, there’s still a serious lack of FCC-regulated spectrum (radio frequencies) available to meet the inevitable future demand from cellular and mobile broadband consumers.
The Google solution, however, may have a genius workaround.
One of the ideas touted as part of Pichai’s presentation was the notion of seamless switching between a phone’s connection to a cellular tower and that phone’s connection to a Wi-Fi hub. There’s still radio frequency usage, but it wouldn’t be bottlenecked the way cell tower networks are quickly becoming.
Or better yet, what if a Wi-Fi network were wide enough to allow a user to remain connected — while roaming — on a phone call using nothing but seamless transfers to the nearest Wi-Fi antenna?
Indeed, it’s conceivable idea that only a wireless connection to the nearest Wi-Fi hub would be necessary to make a call; a wired line (including a fiber-optic line established by Google) could complete the connection from the nearest Wi-Fi antenna to the person at the other end of the phone also only connected to their closest Wi-Fi hub.
This very idea is, in fact, rumored to be in the planning stages for one of the three cities where a Google internet service has been pervasively established using a massive network of newly-laid fiber-optic lines.
Though it would most definitely be a big, long-term (and expensive) project, it’s not an idea anyone could consider crazy anymore.
Bottom Line
This isn’t to suggest Sundar Pichai is deliberately being deceitful. At this time, the plan likely is simply to drive a small set of innovations to see what’s possible.
If it’s deemed to be profitable and sustainable once developed on a small scale, however, there’s no reason Google wouldn’t go forward with it on a larger scale … as it is with its fiber-optic broadband service now that it has been proven to work in its first three citywide tests.
Though it will be years before a dent is made that AT&T or Verizon could actually feel, Google isn’t a beast anyone would want to fend off once it has made up its mind.
Both Verizon and AT&T had better hope and pray this experiment doesn’t work, regardless of what Pichai is saying.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
