Analyst: Google to challenge mobile operators

A London analyst firm says Google’s wireless plans will threaten U.S. mobile operators by offering free wireless connections in major cities. Visiongain said in a report released today that Google’s ad-supported offering presents a “significant threat to cellular/mobile operators.”

Google is initially teaming with EarthLink in San Francisco to provide Wi-Fi coverage for residents in that city. It will be the initial trial of a 300 kilobit per second service that Google will offer for free with locally targeted ads. EarthLink is offering a higher speed service for $20 a month.

The Visiongain report, “Google in mobile and wireless: Analyzing the impact and assessing the threat of the search giant's market entry,” says that if the search engine giant succeeds in San Francisco, it will be able to provide access to free VoIP services as well as email packages, browsing and other features by 2008.

“The argument that Wi-Fi and cellular are complimentary rather than competitive depends on who is operating the service," said report author Adam Walkden, in a prepared statement. "Google's successful advertising-based business model allows the company to offer services for free. If it can convert this business model to include local based advertising to Wi-Fi users, it poses a significant threat to mobile operators. By providing free wireless networks, Google can attract new users whilst keeping existing users on Google for longer. Targeting wireless users with local adverts will aid future revenue growth.”

This is not the first time Google has been seen as a major threat to a segment of the telecom market. The company is known to be acquiring dark fiber assets, and rumored to be considering a means of bypassing broadband network operators by establishing data centers at every Internet peering point to enable delivery of video over the Internet without latency.

The Visiongain report comes out at a time, however, when Google is reportedly finding its first WiFi network, being built in Mountain View, Calif., where Google is headquartered, is requiring more transmitters to achieve the quality of service the company expects. EWeek magazine reported last week that, as a result, the trial may be delayed a month until July of this year.

Visiongain’s study also found that Google is aggressively pursuing the mobile search market, having already partnered with Motorola, Sony Ericsson, BenQ-Siemens, T-Mobile and Vodafone to provide mobile internet search facilities. The analyst firm said Google will continue to improve its search service and be positioned to add email, calendar services and local services, to its mobile package by 2008.