Google MVNO? – Implications for US Wireless Industry

by Tejas Mehta | Jan. 22, 2015
Google’s impending entry into the US wireless market as a Sprint and T-Mobile MVNO according to unconfirmed media reports has created quite a stir in the industry and the analyst community.  The potential implications for such a move can be profound and far-reaching.  Here is what we think of the announcement if the rumors are to be believed.
 
What is in it for Google?
Google has a lot to gain from such a move.  Google already has a significant presence in the mobile marketplace with Android on the software side and Nexus mobile devices on the hardware side.  If Google becomes an MVNO, it can add the wireless connectivity piece to provide a complete mobile experience to its customers in the following ways:
 
  • Google can use its wireless services as a platform to market its services to a broader user base (more bloatware? Sigh…)
  • Google can also have a deeper view of its customers and use the data for more precise targeting and customization opportunities
  • Google can bundle its myriad services ranging from cloud services to mobile payments to drive adoption and enhance loyalty


The precise ways in which Google will use its wireless service is a question that only time can answer, but such a move opens up a range of possibilities for Google. How Google measures the success of the endeavor is another piece of the puzzle, and Google is well-known for toying with new ideas/initiatives and pivoting quickly, if they do not meet their objectives.  We are therefore likely to see some experimentation upfront as Google determines the best position for its wireless service offerings.

How does it affect wireless carriers?
For wireless carriers, the implications are less clear.  There is little doubt that Google’s entry in the marketplace will put pressure on the already shrinking profit margins of the wireless carriers.  Since Google will reportedly use Sprint and T-Mobile’s network, they will have a degree of control on how much Google can compete with them on price.  
 
Google on its part will certainly not be looking at wireless service revenues as a direct monetization opportunity and can live with much lower margins on the back of the increased revenues from its primary services.  This is what sets Google apart from other MVNOs.  In any case, Sprint and T-Mobile probably think that it will be AT&T and Verizon that will feel the brunt of Google’s foray into wireless marketplace, and they are probably right. 
 
If Google does enter the wireless marketplace in 2015, it will make it another interesting year for the industry.  Game On!


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