Google?s wireless strategy has potential to be global carrier-agnostic service
Google?s intention to offer wireless talk and data plans on a limited scale has the potential to evolve into a global carrier-agnostic service that would be tightly integrated with applications, search and payments while enabling the company to provide higher-priced marketing services.
At Mobile World Congress in Barcelona this week, Google confirmed what had been rumored for the past year that it is working on a wireless service. The strategy, which the company insists is on a small scale, points to Google?s growing focus on mobile as well as the perception that existing wireless carriers have left untapped opportunities on the table.
?In an alternative scenario, this will be a nationwide ? and eventually global ? MVNO that allows users to leverage the right network at the right time based on data speed or data pricing or allotment,? said Philip Solis, research director of mobile devices at ABI Research, Oyster Bay, NY. ?This could be the start of a carrier-agnostic MNVO.
?At its greatest potential, a Google MVNO would allow Google to integrate voice and data services over home and enterprise Wi-Fi access, public Wi-Fi hotspots, and various mobile operators networks,? he said. ?It would combine that access with its OS, applications, search, payments service (Google Wallet + Softcard), and more.
?Google could become to mobile devices what Jasper Wireless is to M2M and telematics. This would all play into how well Google can aggregate information for more accurate marketing services that can command higher prices.?
Google said this week that it will become a mobile virtual network operator. This means the company could buy wholesale access from Sprint and T-Mobile that it would sell to its own customers.
The program will help Google learn more about mobile voice and data services. This is similar to Google?s Nexus program, which initially was an experiment to see how consumer purchased and used smartphones.
As with Nexus, if the wireless service test is successful, Google could expand it.
Initially, Google?s aim will be to increase eyeballs and frequency of engagement to drive revenue from its core advertising offering and not from generating revenues from the MVNO operation.
?For Google, I think this is an opportunity to push the envelope around how mobile access can be offered while at the same time strengthening its own user base with subscription clients who can, with a Google phone, the Google Android operating system, Google apps and services, and a Google mobile connection, operate entirely within the Google ecosystem,? said Sara Kaufman, senior analyst for service provider and markets at Ovum.
?Google can push this envelope because unlike most MVNO?s the end game is not achieving profitability by achieving scale with a compelling offer,? she said. ?For Google, the objective is more in increasing the eyeballs and engagement with its users to drive advertising revenues, which is the company?s core revenue generating offering.?
Mobile communication evolves
The wireless service is an example of how Google continues to look beyond its core business ? search ? as mobile?s role in the lives continues to grow and expand.
Google also said that it will conduct its first test flight of drones later this year that are capable of providing Internet connectivity to those below.
While Google was talking about possible wireless carrier workarounds at Mobile World Congress, Facebook founder Mark Zuckerberg was on hand discussing Internet.org, a project to bring Internet connectivity to underserved areas by providing free access to Facebook, Google search and other services. The goal is to drive smartphone use.
Mobile communication continues to evolve and carriers have not done as good as a job adapting to these changes as they could have.
One development with a big impact is the growth of over-the-top messaging applications, which bypass the SMS services offered by wireless carriers to send messages over the Internet.
The potential in this market is evidenced by Google?s acquisition of mobile messaging WhatsApp last year for $19 billion.
Carriers missed the opportunity to develop their own messaging apps.
Room for innovation
While carriers have relationships with a large number of consumers, many of these customers are frustrated with what they feel are overly restrictive voice and data plans.
As a result of these developments, many see an opportunity for someone like Google to come in and innovate how wireless services are packaged and priced.
?[A Google MVNO] could also break the currently more restrictive pricing for non-handset mobile devices and push mobile operators to change their data share plans as well,? Mr. Solis said.
?The significance of Google?s MVNO depends on exactly how far Google will take it,? he said. ?In one scenario, this will be a limited MVNO used test new features, such as automatically reconnecting a dropped call and using Wi-Fi first including for voice.
?This would provide proof-of-concepts for mobile operators to adopt.?
One potential area of opportunity for Google with wireless services is to focus on the quickly growing market for connected devices beyond smartphones.
?You could easily see Google playing strongly in the connected devices area where we have a burgeoning array of new connected devices that the major carriers are attempting to retrofit into data sharing and/or inflexible, old-school plans that require the customer to pay for monthly line access plus a data allowance on top of it,? Ms. Kaufman said. ?These types of plans are not really tailored to address the types of usage these devices generate.
?So Google could have some impact on redefining how operators charge for connected device access and how operators model their connectivity and services for non-handset mobile broadband devices,? she said.
?Google is also in a good position to experiment with integrated bundles that are content-, apps- or usage-specific offerings and ties in with the company?s suite of productivity, storage and other apps and services. This offering also allows Google to expand its direct billing relationship with end users beyond Google Wallet.?
Chantal Tode is senior editor on Mobile Marketer, New York