Is Google Spreading Its Tentacles to Wireless?

Forms Partnership With Sprint, T-Mobile That Could Open Consumer Service
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Google continues to cast its net further and wider afield, this time by forging a wireless partnership with mobile carriers Sprint and T-Mobile U.S. that could allow it to offer its own direct-to-consumer service.

Reports that the company was considering a wireless offering sent Google’s stock up 3.2% ($16.35 each) on Jan. 22 to $534.39 per share. While Google hasn’t officially announced plans for a wireless service, published reports citing people familiar with the matter said it would likely involve a mobile virtual network operator (MVNO) agreement with Sprint and T-Mobile, whereby Google would use the carriers’ networks to offer a wireless service. The reports speculate it could be offered at first in select markets, perhaps as an adjunct to Google’s ultra-high-speed Internet service Google Fiber.

Google spokeswoman Lauren Barriere said it is the company’s policy not to comment on rumor and speculation.

Whatever the outcome, a wireless offering from Google would be another example of the search giant sticking its thumb in the eye of yet another industry. In just the past few years, Google has taken aim at several diverse businesses, including cable, with Google TV and Google Fiber; wireless handsets, with its acquisition of Motorola; and online retailer Amazon, with its 2013 launch of same-day delivery service Google Shopping Express (now Google Express), all with varying levels of success. Google could also be positioning itself to further solidify the dominance of its Android operating system — already installed on more than half the smartphones in the U.S. — but that will only be proven over time.

In a note to clients, Sanford Bernstein telecom analyst Carlos Kirjner and Paul de Sa said it was hard to imagine why Google would make the leap into the highly competitive wireless market via an MVNO, adding that it was unlikely it would compete on price. He added that pairing a wireless service with Google Fiber — currently in three markets (Kansas City; Austin, Texas; and Provo, Utah) and expanding to nine market areas in the future — would limit the product’s reach.

“We don’t see how Google could or would create a distinctive offer for its own MVNO to a large enough customer segment to matter based on service quality, service features, distribution or pricing,” Kirjner and de Sa wrote. “Our current view is that if the MVNO materializes, it will probably be immaterial for Google and for the wireless carriers.”

Google Pass

Whether it decides to offer its own wireless MVNO in the immediate future, Google has a long history of testing the waters in businesses outside its traditional search-engine operations:

Google Fiber: 1 Gigabit-per-second, fiber- 0based high-speed data and pay TV service currently in Kansas City; Austin; Texas; and Provo, Utah. Plans to expand to nine metro areas and 34 additional cities.

Google Express: Same-day retail delivery service launched in 2013. For a daily, monthly or annual fee users can order groceries, apparel and other goods from various retailers.

Google Glass: The first wearable computer, Google stopped production of the prototype in this month but remains committed to the product.

Motorola Mobility: Google purchased Motorola’s cellphone unit in 2012 for $12.5 billion, in part to gain access to its handset manufacturing capability. It sold the handset business to Lenovo in 2014 for $2.9 billion, one year after it sold Motorola’s cable-focused Home business to Arris for $2.35 billion.

SOURCE Company and published reports

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