Coverage: Google moves into wireless

Google now wants to be your wireless provider. But it’s not exactly what you think. They want to use the existing infrastructure to offer voice, data and everything else.

The New York Times had these details in a story by Brian X. Chen:

It’s official: Google wants to offer a wireless service, but not like just any other phone carrier.

The company plans to team with existing carriers to sell services on their networks. But Sundar Pichai, a senior vice president of Google, says the company’s goal is to provide a proof of concept for a phone service that blends Wi-Fi and cellular networks together seamlessly.

“We are thinking about how Wi-Fi and cell networks work together and how to make that seamless,” Mr. Pichai said in an on-stage interview at the Mobile World Congress conference in Barcelona, Spain, according to the technology news site TechCrunch.

Mr. Pichai did not say which carriers Google planned to team with. He said more details about the cellphone service would become public soon.

Google is experimenting with a hybrid approach that offers mobile voice and data services primarily through Wi-Fi signals. It would fall back on cell towers in areas where Wi-Fi is beyond reach, sources say. Industry insiders call this a “Wi-Fi first” approach.

Ina Fried wrote for Re/code that the move will obviously increase competition for other carriers:

To offer wireless service, Google will need to lease capacity from one or more existing carriers, with Google acting as what is known as a Mobile Virtual Network Operator, or MVNO. Pichai said that the company has already reached out to several.

“We’re working with some partners to do what we’re doing,” Pichai said, according to the Verge. “Carriers in the U.S. are what powers most of our Android phones, and that model works really well for us.”

Pichai said a more formal announcement of the service will happen in the coming months.

Even at a small scale, Google’s entry could be a big headache for wireless carriers already under enough pressure from one another.

By picking between Wi-Fi and cell networks, the Google service could reduce income for carriers by making it more efficient, according to The Wall Street Journal story by Lisa Fleisher and Alistair Barr:

Google’s planned service would sift through cellular connections from Sprint and T-Mobile and Wi-Fi “hot spots,” picking the best signal for routing calls, texts and data, these people have said. Mr. Pichai said the service aims for seamless handoffs between Wi-Fi and cell networks to prevent dropped calls and automatically re-connect them.

Google says it is focused on improving the quality of wireless connections. But tapping Wi-Fi networks could reduce the amount of data users transfer across cellular networks, undermining a growing source of income for wireless carriers.

“If Google focuses heavily on cheaper data usage, that would have downward impact on pricing for mobile operators,” said Neil Mawston, an mobile-industry analyst at Strategy Analytics. “This may go two ways: Lower priced data may encourage much higher data usage, which would be relatively positive for carriers, or Google may drive down data prices so quickly and it could chip away at mobile operators’ profits.”

Mr. Mawston said Google has a history of lowering prices in areas such as maps, email and Android itself, which is free for handset makers. It also challenged telecom-industry giants with its high-speed fiber-optic Internet service in a few cities. AT&T responded with a higher speed service of its own.

David Goldman wrote for CNN Money that the move has been years in the making:

For years, Google has been assembling just about all the pieces it needs to become a mobile provider.

The search giant already makes the most-used mobile software on the planet, it designs and sells phones online, and it has become an Internet service provider with its Google Fiber initiative. It even has its own VoIP phone service called Google Voice, which allows people to get a Google phone number and call people through Gmail or Hangouts over Wi-Fi.

The missing link has been the cell towers needed to build out a nationwide network.

Google is expected to pay Sprint and T-Mobile just $2 per gigabyte, according to Macquarie Securities analyst Kevin Smithen. That means Google could choose to provide super-cheap service that gives Verizon (VZ, Tech30) and AT&T (T, Tech30) something to worry about.

Google declined to name its partners.

While the partners haven’t been announced, I’m sure that many of the competitors are trying to figure out how to counter this move. Google seems to take over every market they enter, not such a great sign for those already in the business.