WHAT'S GOOGLE'S INTEREST IN WIRELESS?
First the Google phone, now its partnership with Sprint -- Google's mobile ambitions are extensive, but how far will the Internet giant go?
The most active service provider in wireless of late isn't the one you'd expect. Internet titan Google has taken an active interest in all things wireless: launching municipal Wi-Fi deals, lobbying the FCC for open-access rules to the 700 MHz auction, embedding itself in the iPhone with Google Maps and having all but confirmed it is preparing its own mobile handset.
Perhaps Google's biggest splash in the last few months, however, has been its partnership with Sprint to become the portal provider for the rollout of Xohm, its planned nationwide WiMAX network. For the first time, Google will move to the front and center of a mobile service, and once it's there, industry experts project, it will be very difficult to dislodge.
“As a company, they've been intrinsically tied to all things Internet,” said Nick Holland, senior analyst for the Aite Group. “And as with all things Internet, moving over to mobile is a logical progression.”
But what are Google's ambitions for WiMAX and, ultimately, wireless? Google itself didn't respond to requests from Telephony for an interview, and it has said relatively little publicly about its overall wireless strategy. But analysts and other industry watchers say the writing is clearly on the wall: Google plans on being a major player in the mobile Internet. It's still unclear whether its plans involve following the traditional service provider role — buying spectrum, rolling out its own network, offering monthly service — or becoming a vendor in the mode of Apple, launching devices as well as applications to run its services, Holland said, but it is almost certain that in one way or another, Google will bring its slew of popular Web applications to the mobile Internet and likely use the new platform to expand on them.
WiMAX may be where Google sees its biggest opportunity. Unlike cellular broadband technologies, which have traditionally been handset-oriented and driven by carrier business models, WiMAX promises to follow the Internet model on which Google built its empire. Barry West, president of 4G for Sprint, has been evangelizing wholesale business models, unsubsidized handsets, open access to the network — ideas considered anathema to the wireless industry just a year ago. Plus, with the WiMAX network's sole focus on broadband data, Internet access will be the primary driver for the business, starting with connecting the laptop. The PC is a platform with which Google is unquestionably comfortable, presenting it with an easy opportunity to extend its search, portal and advertising capabilities to the mobile Internet.
Google isn't just leaving its success on the new WiMAX network to chance, though. Rather than letting its customers find Google as it did when it first launched, Google is placing itself directly in front of customers. The portal deal with Sprint will likely make Google the first thing a user sees on the network, bringing applications such as Google Talk, Gmail and Google Calendar to the forefront. In addition, Google and Sprint could add GPS location and presence features, bringing more powerful capabilities to Google's mapping and communications services.
Still, the effect of the deal may not be felt until Sprint's WiMAX ecosystem expands beyond PC cards and embedded laptops into more sophisticated handheld devices. Google may be a powerful presence on the PC, but to most people, a WiMAX-enabled laptop will be viewed as an extension of the normal PC experience, said Bill Morelli, wireless analyst for IMS Research. If customers use Google Maps at home, they'll likely use Google Maps on the WiMAX network; if they use MapQuest at home, they'll probably do the same on the road. Google's real opportunity to gain more customers and secure its place in the wireless world is when alternate devices come out; device customers won't use the Internet in the same way as they would on a PC, Morelli said. Tablet, handheld browser and smartphone form factors not only are used differently from computers, but they have smaller and more limited interfaces, making Google's prominence on the screen a huge asset, Morelli said.
“The laptop market is already pretty well-penetrated by Google,” Morelli said, “The services they offer over a laptop connected to the WiMAX network vs. one connected to a [wireline] broadband connection won't be that different. What they're targeting is the move to more mobile handheld devices, on which Google can play a more prominent role and design specific applications for mobile.”
Google, however, is considering more than partnerships. It is investigating the possibility of becoming both a vendor and service provider in the wireless space. The much-hyped Google phone has yet to materialize, but many analysts predict it will be a Wi-Fi device that uses the public airwaves and voice-over-IP-based Google Talk to free it from carrier relationships.
Even more of a departure from Google's traditional model is the speculation that Google will become a full-fledged service provider in the traditional telecom sense. The company has lobbied the FCC hard to ensure that provisions for open access were included in the upcoming 700 MHz auction, which will award licenses for nationwide broadband wireless services. What's more, Google has intimated it may bid on some of those licenses. What exactly it would do with those licenses is completely up in the air. Google could opt to build and run its own broadband wireless network, partner with another service provider to run said network or use its licenses as a bargaining chip with an independent service provider when negotiating deals for its applications, said Peter Jarich, wireless infrastructure research director for Current Analysis.
“The reality is that building a wireless network is not a trivial affair,” Jarich said. “It's not easy to roll this stuff out, gain the tower footprint and manage a massive customer base. That said, Google has gobs of money. If you have the right amount of money, it won't be easy, but you can do it.”
For example, Google could tap the infrastructure and professional services divisions of Ericsson or Nokia to not only build the network, but maintain and manage it, leaving Google only to market the service and develop applications, Jarich said. Or it could try to fill an unmet broadband need, such as building out a nationwide in-building network targeting businesses. There is even speculation, Jarich said, that Google could build a network entirely of femtocells.
Google isn't the only non-telco that has been assigned network service provider ambitions. Recent reports from Wall Street media claim Apple also is interested in the 700 MHz auction, seeking a dedicated network for future iPhones as well as other Apple services and hardware.
Despite the hype, the odds of either Apple or Google becoming the fifth nationwide wireless carrier are extremely long, Jarich said. But the prospect of them delving into the space may serve other purposes, he added. The wireless and Internet industries are butting head-to-head today over what form the mobile Internet will take. The carriers on one side want to pursue their traditional role, in which they control the customer relationship, the user experience and ultimately the revenues. Meanwhile, the Internet companies are advocating their traditional model, in which the network is merely a dump pipe to convey their services.
The reality is neither side is likely to give in entirely to the other — there has to be a compromise, Jarich said. While the mobile pipe will have to move toward open access (customers won't stand for it otherwise), carriers won't let themselves be reduced to simple porters of wireless packets. The two industries may have to compromise with deals in which revenues from advertising or services will be shared with carriers while still allowing users to choose where they go and what services they use on the mobile Internet, Jarich said.
“No one wants to be known as a dumb pipe,” he said. “There is money to be made in dumb pipes — look at DSL and cable broadband — but there is more money to be made off of the services layered on it. The carriers won't give up on that revenue, so there's an expectation there will have to be a middle ground.”
GOOGLE'S WIRELESS INITIATIVES
- Xohm: Google has partnered with Sprint to be the portal services provider for its upcoming WiMAX service. Google will supply a suite of communications and organization applications, as well as collaborate with Sprint on location-based and presence services.
- 700 MHz: Google has expressed a surprising amount of interest in the upcoming auction, which will allocate new broadband wireless licenses in the U.S. Not only has it lobbied the FCC to include open-access rules for certain licenses (against Verizon Wireless' opposition), it has indicated it may bid in the auction itself.
- Muni Wi-Fi: Google has launched its own free citywide Wi-Fi service in its hometown of Mountain View, Calif. It also has ambitions to be the service provider behind other cities' municipal wireless launches, although many of those projects have been canceled.
- Google Mobile: Google has recreated many of its most popular Web applications and services for mobile devices, launching Java versions of its Gmail and Google Maps programs and expanding its search capabilities to the mobile Web and short message service. In some cases, it has succeed in placing specific applications as core services on handsets and mobile devices, such as Google Maps on the iPhone and Google Talk on Nokia's Internet tablets
- Google Phone: Almost a foregone conclusion, the Google phone is the most anticipated device since Apple's iPhone, even though Google has not officially confirmed its development. The big question is whether it will be a Wi-Fi-only device using Google Talk or one with a cellular chip.
- AdWords: Google is optimizing its core text-ad-delivery technology for mobile, serving up ads for mobile-optimized sites on specific phones when conducting a mobile Web search.
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