Meet Your New Wireless Provider: Google
Can’t stand your wireless provider? Well, Google (GOOGL) is going to show them how it’s done.
Having conquered the search engine business and dominated the web advertising world, the tech giant is constantly looking for new areas to vanquish. Robots, driverless cars, and renewable energy are all in play.
Put simply, if Google thinks something is being done wrong – or could be done better – it’s a good bet that the company will try to improve it.
Combine outstanding innovation with a boatload of money to fund it, and you’ve got a recipe for progress.
And that’s exactly what Google plans to do in this massive tech field…
Google Going Wireless
Google’s free-thinking (and spending!) ways are now taking the company into the world of wireless communications.
What does this mean?
Well, its recent announcement was a little sparse on details. But given Google’s history of innovation (particularly with Android, in this case) and approach, we can predict that the company will shake up the wireless business.
But it won’t build its own wireless network to do so.
Rather, it will function as a mobile virtual network operator (MVNO).
This gives Google a distinct advantage. It doesn’t need to acquire spectrum, build its own towers, or deploy its own receivers. Rather, Google will rent all of these things from one of the big cellular providers – Verizon (VZ), AT&T (T), Sprint (S), or T-Mobile (TMUS) – and focus on selling phones and providing customer service. There are other companies, such as TracFone, that operate this way.
In turn, with a minimum investment in network equipment, that means Google can get to market cheaper and more efficiently as an MVNO.
It also tells us what Google is not going to do…
Google’s Three-Pronged Wireless Attack
Because Google won’t own the network, or any of the wireless spectrum, we know the company isn’t going to be experimenting with that part of the wireless infrastructure.
So what will Google be up to?
Basically, everything else is on the table. For example…
The Cell/Wi-Fi “Intersection”: Google says it’s entering the wireless business to shake up the status quo and show the big carriers what’s possible with their existing networks.
One way the company wants to do that is by improving the “intersection” of a cellular network and Wi-Fi.
Now, all the big carriers allow you to use Wi-Fi networks, of course… but Google says it plans to use its huge database of Wi-Fi networks in order to make its devices switch more seamlessly between cell networks and Wi-Fi. What’s more, Google will use multiple wireless networks, so it can choose whichever wireless provider has the stronger signal, or a Wi-Fi network if that’s better.
Result? Customers receive more reliable data at a lower price.
Drop and Reconnect: We all know how annoying it is when our wireless provider drops a call. But Google wants to be able to automatically reconnect its customers when calls are dropped.
The Apple Battle: It’s no surprise to see Google scrapping with Apple (AAPL). In this case, Google plans to use its wireless experiment to maximize Android and try to create a competitive advantage over Apple. As such, it will be working on new applications, improving the Google Wallet and Android Pay mobile payment systems, and learning more about the habits of its smartphone customers.
Google Will Stay Small… But With a Big Reach
Unlike some of its other ventures, Google won’t barrel into wireless communications with guns blazing. It’s entering as more of a “coach” to the big providers, rather than direct competition to them.
Still, that doesn’t mean the big providers will be able to ignore Google. As a smartphone customer, you’re likely to benefit from Google’s entry into this business, even if you never even enter its service area. How?
Well, a good parallel to this move is Google’s entry into the internet fiber business. Google is currently building gigabit fiber networks, capable of carrying far more bandwidth than almost any home user could ever need.
The company started in just four cities… but even with recently announced expansion plans, it will still only cover well under 10% of American homes.
Guess what, though? After Google entered the business, a funny thing happened…
The existing cable internet companies “suddenly” discovered that they could provide faster speeds than they could before Google showed up. Not only that, they could do so in markets where Google competes – and at a great price, too. Imagine that!
We can only hope that something similar happens in the wireless world.
Google’s interest is simple: Make more bandwidth available to more people at lower prices, so it can continue to offer faster content (and advertising!). In turn, the existing providers will have to react. And if they don’t react well enough, Google will keep expanding until they do.
To living and investing in the future,