Google's (NASDAQ: GOOG) rumored MVNO service with Sprint (NYSE: S) and T-Mobile US (NYSE:TMUS) would hunt for the best available cellular or Wi-Fi signal to route voice, text message and data traffic, according to a Wall Street Journal report.
The report, citing unnamed sources familiar with the plans, said Google's wireless offering could be launched in the first half of this year and would likely be available nationwide. However, previously scheduled launches--including one in October 2014--have been delayed, and this one might be as well.
Google, Sprint and T-Mobile have declined to comment on the reports.
It's unclear exactly how such a service form Google would work. Presumably, devices sold through the company's MVNO will support radios for all of the spectrum bands that Sprint and T-Mobile use for their networks and will be able to dynamically switch among them. According to the Journal, Google wants to give customers the best and fastest wireless connection without them having to worry about a long-term relationship with a carrier. The initial reports on the service last week, including one from the Journal and one from The Information, said that Google wants to offer inexpensive wireless service, but the new Journal report said that lowering prices isn't the goal.
However, the report added that the technology Google is working on to switch between services based on quality could also be used to consider price as well, which might spur carriers to offer lower prices.
"It's a very aggressive move," Devicescape CEO Dave Fraser told the Journal. "You can imagine Google driving down the price to be disruptive and paying for it with revenue from other services that the company already provides, like search and advertising."
While the MVNO business model is widely used and commonplace in the wireless industry, and Sprint and T-Mobile have been champions of that model, Sprint is apparently hedging its bet by putting a so-called "volume trigger" into its contract with Google that would allow the deal to be renegotiated if Google's customer base grew too large, according to the WSJ. It's unclear if T-Mobile has a similar arrangement.
Google is apparently looking to disrupt the traditional wireless model but also faces hurdles. It would need to market its service, handle customer service and compete against incumbents that have built out nationwide networks.
Verizon Communications (NYSE: VZ) CFO Fran Shammo said last week he would have to wait and see if and how Google launched an MVNO, but noted that each MVNO faces its own challenges. "MVNOs or resellers or people leasing the network from carriers has been around for 15 years," Shammo said. "It's a complex issue. You have to deal directly with the consumer; there is a whole infrastructure that is needed to do that."
- see this WSJ article (sub. req.)
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