Google may be planning to sell wireless service by partnering with Sprint and T-Mobile, according to numerous media reports this week. If this does take place, it could be the beginning of a significant price war in the cell phone industry, putting some extreme pricing pressure on the two largest carriers, Verizon and AT&T.
A partnership with Sprint and T-Mobile, the industry’s third and fourth largest carriers, would enable Google to enter the market almost immediately. The search engine giant would not have to build an expensive network of cell phone towers throughout the country. Google would probably become a Mobile Virtual Network Operator (MVNO), and purchase excess capacity from Sprint and T-mobile, reselling it under the Google brand name. They might leverage both carriers’ networks to create a mega network that would compete better with the stronger networks of Verizon and AT&T.
Some analysts feel Google may employ the same strategy used by another MVNO. FreedomPop is an MVNO that offers a limited free cell service over Sprint’s network. It has a $7 a month plan that allows for unlimited talk and text with a 500MB of data. They accomplish this pricing structure by only utilizing the data circuits for voice calls using a version of VoIP to carry the call.
Sprint and T-Mobile have plenty of data capacity on their networks, so it would not be a stretch to see Google offering a service similar to FreedomPop. But Google could use both networks to have a larger coverage area.
The announcement has already started to make the larger carriers nervous. In a report in the Financial Times on Thursday, Fran Shammo, chief financial officer at Verizon, was quoted as saying he thought the influx of customers from Google might stress out the Sprint and T-Mobile networks .
“Google wants quality of service and there could be an issue if a bigger volume of traffic is placed on their networks,” Shammo said.