Where is Google going with its wireless carrier move? Or for that matter, with its push into the telecommunications markets: we’ve seen Google Fiber rolling out across the United States of America, bringing ultra-fast Internet connectivity and low prices with it, which has disrupted the traditional broadband businesses. We’ve seen the business make plans to start selling a wireless service to customers using a blend of WiFi, T-Mobile USA and Sprint service and you can bet that this will be disruptive to the mobile carriers. I’ll throw into the mix that Google have also been showing off the modular Project Ara smartphone, which will eventually disrupt the mobile device manufacturers, too. The disruption has been caused by offering customers a better service for less money. Google are serious about getting the Internet in peoples’ hands for less than it currently costs and there are wide reaching implications for what their activities mean.
When it comes to being able to keep prices down, Google has a secret weapon: it doesn’t necessarily need to make money from these new ventures, because it already has an established business elsewhere. This means that it can break the established rule of acceptance that services cost a given amount. Have you ever wondered why similar cell service plan costs are usually within a few dollars across the providers? There are many reasons why the bill is what it is but ultimately, it’s what the carrier can get away with charging you and there’s an element of competition in here, too. The carrier needs to make a profit in order for it to be a viable business, but what if the business doesn’t need to make a profit? We do see businesses offering a reduced price during the earlier few years when they are building market share but these prices return to an established norm over time. Google’s changing the norm; it’s able to offer services to customers at no or very slim margins because it’s benefiting in other ways, namely, by giving people access to its online services, it is deriving data from their use. It’s this data that forms their core business and they’re very good at collecting it.
Let’s take another look at the wireless carrier plans that Google appear to have. Customer devices will have three ways to connect to mobile voice and messaging: Sprint, T-Mobile USA and WiFi. We’ve seen other carriers launching WiFi-based mobile services (and Cablevision’s new service is WiFi-only) and it’s a fantastic way to reduce costs, because WiFi is almost free. These savings will be passed on to customers. And yes, WiFi isn’t everywhere whereas the mobile carriers have great coverage, but Google have a potential solution here thanks to free public WiFi provided by Google Fiber. Again, this is something that Cablevision are doing. Furthermore, because Google benefit when customers use data, it would be logical for them to encourage customers to use as much as we want. This is at odds with most carriers around the world, where capped data plans and overuse charges are a constant reminder that they’re in the business to make money.
In effect, Google may be taking the Verizon Wireless supercookie scheme of things (by looking at what you’re doing online with your device) but rather than charge you more for the service and sell on the data to another party (thus be paid twice for the one customer), they’re discounting the value of the data back to the customer. I’m not overly comfortable with the idea of my smartphone usage being used for profiling purposes, but if I’m going to use Google Services it already happens. And I’m happier being credited back for my contribution.