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Google’s Wireless Service To Use Sprint and T-Mobile USA But What Of AT&T And Verizon?

January 25, 2015 - Written By David Steele

Google are entering the North American mobile carrier market in conjunction with Sprint and T-Mobile USA. They’re to become a MVNO, mobile virtual network operator, in other words they are to sell on air time and data from their selected carriers. For Google, this means that they can have a better handle over the service that customers receive right from picking the device to using it at the sharp end. From the carriers’ perspective, they are joined by a large partner with influence right across the board with the device manufacturers to end consumers. The new Google wireless service is reckoned to be working by the end of the year and when this happens, I expect there to be ramifications right across the North American industry and later, the rest of the world.

What does Google’s deal mean to AT&T and Verizon Wireless, the two largest US carriers that appear to have been left out in the cold? It is highly likely that Google and both AT&T and Verizon have directly discussed Google’s wireless provider plans but for whatever reason, the two larger carriers and Google didn’t ink a deal. In short, this deal will likely result in stiffer competition in several ways. Firstly, from a pricing perspective; Google have significant financial clout and are likely to be able to offer more for less, although they will probably have arrangements in place that prevent them from undercutting their host networks by a massive amount. Secondly, because Google are in effect investing into both Sprint and T-Mobile USA, this cash may be used to improve network coverage and performance (and I would not be surprised if there are terms included to this effect). This means that in the medium to longer term, Sprint and T-Mobile USA will be better able to compete from a networking perspective with AT&T and Verizon. This is very good news for customers and less so for those carriers currently left out in the cold. It’s fitting for Google, who appear to want to provide the world with affordable, inexpensive Internet coverage.

Verizon’s Chief Financial Officer put it this way: “Like everything else, you have to watch your friends more closely than your enemies, so we will be watching Google closely.” Verizon have recently reported that they are not going to pursue a price war, which follows a profit announcement that fell short (as Verizon were selling handsets and tablets at steep discounts in order to keep customer numbers up). It would appear that AT&T and Verizon have something to lose, but I am certain that Google won’t want to destroy the two larger carriers, more assist T-Mobile USA and Sprint compete on a level playing field. I would expect to see Google’s carrier get priority treatment for Android products, but not necessarily exclusivity. Google’s wireless carrier has the potential to be significantly disruptive for the North American carrier environment in favor of consumers, but it needs to be careful that the larger carriers decide to find an exit, as incredulous as it might seem. It may shake out manufacturer and carrier deals; I wonder if Apple are considering running their own wireless carrier?