Can Google and Apple challenge carriers?

February 9th, 2015 by · 1 Comment

This article was authored by Jouko Ahvenainen, and was originally posted on telecomasia.net.

Several publications have reported that Google is planning to sell mobile phone plans to consumers. Google is expected to make a deal in the US with Sprint and T-Mobile to sell their capacity. I wrote earlier about Apple’s own SIM card plan. Traditionally MVNO’s have been doomed to fail. Can Apple and Google really challenge carriers?

We don’t know the details of Google’s plans yet. There are different kinds of reports like that Google would probably utilize also its or its partners’ WiFi networks for network access together with mobile networks. There are also speculations that Google would have a sort of ad-funded model, i.e. users should get certain amount ads to use the service. Some parties also expect Google to acquire some existing MVNOs in the US.

A few telecom experts have already stated that Google’s MVNO plans will fail. They have listed many reasons like 1) complex engineering to combine mobile and WiFi access smoothly, 2) Google has no experience from customer service centers, 3) Google has been slower than expected with its broadband network, 4) Google should compete in advertising dollars to get visibility with carriers and they don’t seem to have a clear target group for the service.

The fact is the most of MVNOs have failed or they are small niche players. Some MVNOs focus only on certain immigrant groups that like to make international calls to their home country. Also some supermarket chains (e.g. in the UK) offer their own SIM cards, and they typically are a kind of low cost options for basic calls and texts. The ad funded MVNO Blyk failed in its concept and then tried to offer the concept as a service to carriers without significant success.

Apple’s SIM concept is different. It is not really an MVNO model, but more to offer a SIM where the user has the freedom to choose an operator with the SIM.  Apple is much stronger than Google if we consider retail channels. Google tried online sales for Nexus, but it didn’t become significant. Google also failed with Motorola.

At the same time we see that Apple, Google and Microsoft are able to dominate software and apps in phones. This also offers them a good possibility to bundle more services like cloud storage, music and videos, and business applications. It can also help them to subsidize phones and include their services in the package. Carriers have totally failed to come to the business of apps, music or business solutions. And both carriers and phone manufacturers (like Samsung or earlier Nokia) failed to manage software in phones.

It is easy to argue that Google cannot succeed with this plan. At the same time I see that many arguments that are used to predict its failure are very traditional carrier comments. Maybe they should also ask whether someone can really do things differently. For example, I agree it is hard for Google to create a huge call center. But could Google get things to work so that it is not needed? Don’t come tell me that carriers are so great in customer service and make people happy. Also, if we think advertising dollars, Google has its own ways to run advertising most probably they wouldn’t use millions to target TV ads.

It is not an easy road for Google. I’m skeptical it would be a ‘use as much as you can to watch ads’ model. Advertising would somehow be included, but I see bundling it with Google’s other services as a more probable model to get it to work. A fact is that Google needs more revenue streams. We don’t have enough evidence to doom Google’s possible mobile business before we know more. I think new innovations and more revenue models are welcome for the industry as a whole.

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Categories: Other Posts · Wireless

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  • John Snow says:

    If anyone other than the already known national carriers want to make a run, Google and Apple have the best chances. Buying a device? Add our phone or wireless services and we will discount the device by x%. who needs national advertising when you can advertise when you purchase? But they better give real discounts and not just raise prices to compensate.

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