In 2008, Google bid in spectrum auctions in the US prompting speculation that they wanted to become a carrier, actually this was focused to unlock open-access rules which allows any device or application to connect to the spectrum used by the carrier, effectively enabling OTT applications (Google voice, Skype, Whatsapp etc. However, rumours and speculation have continued to be persistent about Google becoming a carrier. Here are some reasons why it doesn’t make sense for Google to be a carrier
1) Current Carriers Hate Competition
The idea that Google might enter the carrier ring would make current carriers think twice about subsidizing Android devices, why subsidize the competition’s devices? You don’t see vodafone branded devices on other carriers. Carriers won’t take kindly to Google encroaching on their turf. Carriers still have some power in making or breaking devices. One of the reasons for the fall of Nokia could arguably be because carriers refused to take their devices and promote them because they remain one of the main sales distribution channels for phones.
2) International view
If Google were to successfully gain spectrum in the US, the rest of the world would instantly stand up and notice. Will Google try something similar in the future in different countries? This would lead to an Android ‘backlash’ as more and more carriers restrict sales channels
3) Hardware sales is not Google core
Google would have to sell their Android devices through their own stores. Google just don;t have the DNA to do this. It would take time before they can do this effectively. They could try online sales, but the failure of the original Nexus when it was boycotted by most of the carriers demonstrated how physical sales channels still dominate when it comes to phones. Android has gained traction now, so there may be more success via online only sales, but most people still like to physically compare phones unless they have already have made their purchasing decision. This would still affect effectiveness of sales.
4) Customer Support
Ever tried getting customer support from Google? There’s no easy direct way to contact them. Support for the Nexus was terrible, providing only email and forums. Supporting customers with their carrier issues is on another scale, and something that Google has never experienced.
Owning spectrum is one thing, building out the infrastructure to support an entire country is another, and it would take a lot of money and time to build out a decent network. Sure, they could be a MVNO to begin with, but i wouldn’t bet on many other carriers wanting to help Google unless they were required to by the FCC. Secondarily, Google is a software company and not experience in the rollout and upgrades of network infrastructure to the scale that AT&T, Verizon and T-Mobile have.
6) What are the advantages?
There are very few benefits for Google. The main one is the customer relationship. Rather than sharing that with the carrier, it would give google direct ownership of the customer, which means they can better lock people into their ecosystem creating hurdles for people to switch out, effectively creating a switching cost that many people won’t bother with. However, the costs and lack of expertise is likely to cost them more than the benefit gained from running this type of strategy.
Given the above, it just doesn’t make sense for Google to traverse down the carrier route. They would be better off utilising their market power with Android as a negotiating tool with carriers.
(Photo credit wallshq.com)