The Many Ways In Which A Google-Powered Mobile Network Could Be A Game Changer

from the come-for-the-low-prices;-stay-for-the-features dept

Wed, Jan 28th 2015 3:41pm — Derek Kerton

By now, you may have already read last week's news, broken by The Information (paywall -- but covered widely by lots of other sources), that Google plans to launch a mobile cellular service in the US late this year -- as an MVNO (Mobile Virtual Network Operator -- basically offering a cellular service, but using someone else's physical network).

This is huge news, and it is correctly observed that this is likely to shake up the industry. The Google virtual network, rumored to be called Nova, will run on top of not one, but two infrastructure-based network operators: T-Mobile and Sprint. By combining the two, Nova can have wider geographic reach, higher average data speeds, and higher average signal strength. It may also be possible to bond the two carriers together to get much faster speeds. Nova could also benefit from lowest-cost routing, running on whichever network's costs are lowest in real time.

Analysts have suggested that the threat of Nova will strike fear into the hearts of Verizon Wireless and AT&T, and perhaps it does. Sprint and T-Mobile, whether combined by a merger, or virtually by Nova, are still a far more formidable competitor than each alone. And Google is known for offering services for free (or very cheap compared to industry norms). I wouldn't expect to see any kind of free cellular service here. At best, Google will offer the service above cost, which I'd estimate could start as low as $15 per month. And that's the crux of most of the news coverage: "Google to attack market with low price."

But most of the analysis thus far has left a lot of forward-looking ideas on the table. I'm betting that Google has much more in mind than a relatively low-price cellular service that can ride on the best signal of two networks. Here are some ideas Google should look to push out, and if they do, it will reveal how this MVNO is a huge strategic play for Google:

Nova will not be a virtual network that aggregates two disparate networks. It will aggregate three. The increasing spread of WiFi hotspots and their IP-based connections are a no-brainer. And if Google seeks to keep prices low, it can offload as much data as possible onto users' home and work WiFi networks. Expect the Nova virtualization layer to incorporate IP connections from Sprint, T-Mobile, and WiFi.

That said, it makes sense for Google to jump into telecoms now, when an IP-only network is finally feasible. LTE provides the low-latency data connections required for VoIP. I expect Nova to be either all-VoIP, or at least mostly so. This lowers the operational expenses versus a conventional cellular service, which has to manage classic circuit-switched voice networks and an IP data network in parallel.

To further drive down the costs of the network, and increase the amount of WiFi offload, I wouldn't be surprised if Google either partnered with, or copied a company like Devicescape*. Devicescape is a firm that has aggregated millions of public hotspots into a "Curated Virtual Network" (CVN). This firm, or similar competitors, has already developed and demonstrated the technology to virtualize millions of diverse WiFi into one virtual layer. Google will probably follow on the heels of Republic Wireless, which uses the CVN and keeps costs down by being a "WiFi-first" cellular MVNO on Sprint's infrastructure.

It's rumored that over at Sprint, which is now owned by Japan's Softbank, the driving force for this deal was Masayoshi Son. Son isn't known for modest market disruption. He goes big. He spent $21.6 billion to acquire a controlling interest in Sprint, and one of the key assets of the deal isn't Sprint's current standing in the US cellular market -- it is Sprint's tremendous (yet fallow) spectrum holdings at 2.5GHz. Now, with all that money spent, a question looms: What deep pocketed partner could be entreated to help invest the capital required to develop LTE-A networks on that spectrum? Google certainly comes to mind. At the very least, a popular Google MVNO would bring demand for data that would help Son develop and utilize his US spectrum assets.

That covers the network upheaval, so now onto phones and devices.

Google's Nexus phones have always been a success at pushing along the other phone makers and carriers, but less of a success in terms of sales volume. But the Nova network could change the outlook for Nexus sales. As it stands, the Nexus 6 is among the few phones that already has the right radios for both Sprint and T-Mobile's different networks and frequencies. The mere existence of Nexus line proves that Google can get phones made to meet its precise needs (a huge feat, for anyone who knows this industry). But, up to now, Nexus phone functionality has been both driven by Google and also limited by mobile carriers. No sense building in features that carriers or their networks won't support, right? And that's Nexus, the most un-encumbered phone model available. Every other handset OEM out there gets pushed around even more by the powerful carriers, since carriers are the bulk buyers of the devices. So far, Apple is the biggest exception. Apple has fought and won more vertical market power than any handset vendor ever. Apple can drive many features to market, but even so is still limited by carriers: Remember tethering, or FaceTime being blocked? But what if Google were the carrier for its own Nexus phone? There would be nothing between the services it conceives and the customer. So, Google will sell more Nexus phones, and the phones will enhance the Nova network's functionality. And all with low capital invested or risked, since Google owns neither phone factories nor network towers.

And in fact, the Nova network is just the "Nexus One of cellular networks." Let's not forget the Nexus One phone success strategy: Either Nexus succeeds and sells high volume, or it fails, but still pushes other stakeholders along towards Google's market objectives. You can substitute the word "Nexus" in that sentence with either of: "Google Fiber," "700MHz FCC Auctions," "Android," or "Nova" for that matter. It's a great strategic play for Google: Heads we win...tails we win. But there is thin ice here with respect to Fair Trade -- it's not fair for Google to deliberately fail in the cellular market, or lose money just to bring down its competitors (the economics term is "dumping"). But, in this case, Google can easily try to make Nova a money-earner, and/or a strategic win. And the WSJ has reported that Google is not strictly pursuing a low-price service.

So, the phone hardware issue is also disruptive. What about services, features, and functionality? Now comes the icing on the cake:

An unconstrained Google phone on its own network, running all-IP would unleash many of the company's disparate services that have somewhat languished as orphans for years. Google Voice could be the entire voice component of the Nova network, featuring cheap worldwide VoIP, visual voicemail, and voice messaging a.k.a push-to-talk. Hangouts would be the default chat and SMS app.

Where else does Google have ambition, and could the phone fit in there? The Android Auto efforts, perhaps? Connected home via its assets Dropcam and Nest? Why not. A Nova Nexus could easily be a hub inside a connected car, leveraging the car's display with Android Auto. Throw out voice commands using your car's microphone telling your garage door to open and to turn off your home alarm. The Internet of Things? Sure, Google can be more creative, and offer very interesting pricing models in IoT, if it operates its own MVNO.

Now, to push some boundaries, what about total communications convergence? Think "smartphone in the cloud". Google could take Chrome on the desktop, Google Apps on iOS devices, and Android tablets and reproduce the full range of communications services from the phone. Sitting at your desk, but forgot your phone at home? MMS, SMS, and other chat services would just pop up on your PC. You could make voice calls using the same number from anywhere - one cellular account, but on any device. Need to make changes on your mobile phone? Do it remotely from your PC. And it's not just computers that could access the phone's features: your TV, your car, or your Microsoft Hololens could each be virtual iterations of your phone. Suddenly, your "communications self" is liberated from this 5" brick to which we've become so attached. Your "self" follows you, not your phone. Google has been working on many of these ideas for years. You can use Google Voice, and Google Hangouts on a smartphone and a PC, but it adds complexity for users because the phone still has another voice service, another SMS app, and phone number as its identity. That phone identity historically has been locked within a carrier's garden walls. But with Nova + Android + Nexus, Google can remove the entire construct of walls.

Can Google promote, market, and sell a device? Well, the company has learned a lot since the first Nexus One. The Play store is now much more polished, and it successfully sells devices every day. Google can easily promote its network and phones in its search results, or in millions of other ad inventory spaces that it manages. Support was a noted weakness of the first Nexus One, but even that has come a long way. Google now has a few years of experience in customer support through projects like Google Fiber. So, while support is unlikely to be a specific strength for Google, the bar isn't really set that high, is it?

Now, none of this is a slam dunk. Analyst Phil Goldstein wrote over at FierceWireless that there are 5 reasons why Google's MVNO will fail. And while I disagree with five of his five points, it is true that there are numerous hurdles to overcome. Goldsteins five points, in aggregate, represent true barriers. And we've seen lots of big profile MVNOs fail. In fact, on the US docket, the more ambitious the MVNO, the lower the track record of success. The failures have stemmed from high handset cost (ESPN), an app posing as a carrier (Amp'd), no clear target market (Disney), high marketing and Subscriber Acquisition Costs (Helio). To counter, I would argue that Google has the ability to produce hardware at the right price points, has a very wide audience of Android and Google users, and has good access to their markets using existing web properties. And it's not all doom and gloom, lesser MVNOs have frequently found measured success: Simple Mobile, Republic Wireless, TracFone, Virgin Mobile, etc. And none of those had the structural advantages, or deep pockets that Google has.

In short, there is a lot more below the surface of a Google MVNO. You can bet that the ambitious people steering this thing are not simply thinking of "a new network using T-Mobile and Sprint, but slightly cheaper."

*Disclosure: In the past, I have been a consultant for Devicescape. I haven't had a professional or financial connection to the firm in over a year.

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Filed Under: competition, google wireless, mobile, mvno, networks, nova, wireless
Companies: google, sprint, t-mobile

32 Comments

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PW (profile), 28 Jan 2015 @ 4:02pm

Aren't we missing something here?
For all the market dynamics and integrated services listed here that make this interesting and possible, we should be VERY afraid given how it could enable Google to violate our privacy (otherwise said, enable the gov't to have easier access to any info about us) with greater ease over so many more aspects of our lives. Basically, this would represent every user of this service signing up to being a committed piece of the Googleborg, versus just simply having some scattered pieces across various services. My enthusiasm here stops short of the fear this creates given their track record on privacy and personal security. The latest Wikileaks investigation and accompanying information requests and "gag" orders that were fought and/or observed make it pretty certain that in this scenario things can only get worse.
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PRMan, 28 Jan 2015 @ 4:46pm

Re: Aren't we missing something here?
And who has fought harder for the customer against the government and MAFIAA than Google?
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Anonymous Coward, 28 Jan 2015 @ 5:31pm

Re: Re: Aren't we missing something here?
The EFF?
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Anonymous Coward, 28 Jan 2015 @ 5:33pm

Re: Aren't we missing something here?
True, but every cloud has a silver lining. This will light a fire under the telco monopolies. If Google provides an alternative, they'll have to actually start competing, so even people who don't switch will get better service.
Plus, the telcos will cry big, blubbery tears and make whining public statements about how horrible it is to have to provide reasonable service at a decent price. (I seem to recall AT&T doing so when Google Fiber started spreading, anyway.)
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Anonymous Coward, 28 Jan 2015 @ 5:44pm

Re: Re: Aren't we missing something here?
And who has lost more battles?

(Keep in mind that we only know about some of them, since Google has repeatedly demonstrated that it will obey gag orders until it no longer must. So: how many other shoes are going to drop, or will never drop?)

Google is completely, utterly, thoroughly backdoored by the USG. I'm sure some of their staff will deny it because they don't believe it to be true. But c'mon: read everything that's published over the last two years: do you really honestly think that the DHS, the NSA, the FBI, the DEA, the CIA are going to leave all that beautiful data on the table? No way. They have their own people working at Google, they have NSLs, they have court orders, they have every possible method and tool they can deploy directed toward extracting every last scrap of data that Google has.

This will only make it worse. For everyone, not just the people who sign up for it, because every time they interact with anyone else, that data will be vacuumed up too.
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Anonymous Coward, 28 Jan 2015 @ 5:46pm

Hopefully this will help drive a lot more business to Sprint and T-Mobile. Allowing them to build out their wireless infrastructure and expand their signal coverage across the nation. I think that's the biggest thing holding those two companies back.
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Anonymous Coward, 28 Jan 2015 @ 6:20pm

Wow, the telco shills are out of the woods I see - so google will be bad because they are following the gag orders, while at&t is good because they don't have a data split installed by NSA on their trunk ... ohh, wait, at&t already has the split installed in the famous black room . If this is the only reason google should not launch their nvmo, I'm pretty sure at&t and verizon should start planning on better services or they'll get mauled.
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NoahVail (profile), 28 Jan 2015 @ 8:50pm

Not how that works.
Nova, will run on top of two networks T-Mobile and Sprint.
It may be possible to bond the two carriers together to get much faster speeds.

I don't think so.
Bonding would need both ends of both connections to terminate at the same places - 2 ends at the device, the other 2 ends at the same tower.
You'd also need bonding support at each end.

Using 2 networks, I could see a performance difference if 2 apps were each saturating a connection.
But even pulling that off would require the device to have some sophisticated traffic management.
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tqk (profile), 28 Jan 2015 @ 9:07pm

Re: Re: Aren't we missing something here?
And who has fought harder for the customer against the government and MAFIAA than Google?

Me? Google is required by law to put up with DHS / FBI / NSA BS. By choice, they also put up with MafiAA BS. Their choice. I on the other hand, avoiding G.'s ministrations, am free to diss them all at my leisure.

I'm not a G. hater, just a G. avoider, and no offence intended towards G. I prefer not to go their way, is all.
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tqk (profile), 28 Jan 2015 @ 9:13pm

Re: Re: Aren't we missing something here?
This will light a fire under the telco monopolies. If Google provides an alternative, they'll have to actually start competing ...

Don't be ridiculous. Come on! Holy Polyanna, batman!
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Anonymous Coward, 28 Jan 2015 @ 11:59pm

Doesn't using wi-fi eat up battery life like there's no tomorrow?
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Michael J. Evans, 29 Jan 2015 @ 1:22am

Re: Not how that works.
The routing table in Linux is capable of sending most packets out of one interface and other packets out of another via normal rules (more specific route prefix equates to higher metrics on systems, so you could add a route per address).

A larger question will be if the device radio package is capable of maintaining a connection to that many different channels of frequency at once. For devices with multiple radio channel support it might still be worth it to route time insensitive data (email, non-interactive things, buffered video streams (youtube)) via one channel and high priority stuff like phone calls over another.
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Anonymous Coward, 29 Jan 2015 @ 2:10am

Google having access to everything involving my phone? ha.

Good luck with that, Google.

I bet the same guy that thought up the Google Glass disaster thought this one up too.
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Ninja (profile), 29 Jan 2015 @ 5:36am

Re:
From my experience not as much as using mobile internet (4G or whatever u call). Still that's something manufacturers will have to address, we need more battery juice.
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Ninja (profile), 29 Jan 2015 @ 5:38am

Re: Re: Re: Aren't we missing something here?
Which is the same for all the other Telcos and it is mroe damning because at least Google tries to fight off some of said surveillance. I'm all for Google here even with these caveats. It won't get worse than it is. And you can always use your own encryption apps to boost privacy. In fact it should be default.
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Ninja (profile), 29 Jan 2015 @ 5:41am

Re: Re: Re: Aren't we missing something here?
It all depends on how good their offerings are and how fast they expand. I think all infra-structure should be provided in the background and all phone carriers should be virtual and have access to ANY network as long as they paid for such use. Something close to the Internet but not quite there since we still have the last mile issue which is fueling all the neutrality debate.
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edinjapan (profile), 29 Jan 2015 @ 5:52am

The Japanese Gov't hates Masayoshi Son
Let's get something straight from the start. All you dumb, whining Gaijin don't know what you are in for. The Zaiinichi Ninja is about to make the US alphabet soup agencies shoot themselves in the head.

If Masayoshi Son is backing this then Google is not in the driver's seat-he is. Son doesn't back losers, he doesn't let things stop him-that's how the son of a poor Zaiinichi pig farmer broke through the barriers in a country where Japanese Koreans are treated far worse than American Negroes. And he's an expert at manipulating the rules and getting a corrupt and xenophobic bureaucracy to work for him.
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edinjapan (profile), 29 Jan 2015 @ 5:58am

Re:
"Google having access to everything involving my phone? ha.

Good luck with that, Google."

Gaijin san it sounds like you have something to hide? Is it dirty pictures or plot to overthrow government of North Korea? Google doesn't care but maybe guy in black suit and wearing black googleglass sunglasses will recruit you into NSA.
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Josh in CharlotteNC (profile), 29 Jan 2015 @ 7:47am

Re:
But you're fine with Verizon or AT&T having that access?

Google isn't perfect, but they're so far ahead of the other carriers that it isn't even a contest.
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Anonymous Coward, 29 Jan 2015 @ 9:02am

Google needs our best wishes and $$$$ for what it is doing to AT&Ts of the land. One may say that Google will become something like a Comcast of today. That's fair comment. In the future some garage made company will show Google its place. That's for sure if past is any indication.
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Derek Kerton (profile), 29 Jan 2015 @ 9:13am

Re:
That problem was huge pre-2008, but has been largely addressed. Now,
- most phones can vary their WiFi RF power, as they do with cellular.
- better sleep cycles with mobile device use in mind are integrated, where early WiFi was designed for plugged in devices, then laptops.
- in fact, the smartphone power issues having been solved, the WiFi Alliance has been more focused of late designing in the ability of WiFi to compete with Zigbee or Bluetooth in the IoT, where batteries might power embedded modules for years.

refs:
http://www.wi-fi.org/knowledge-center/faq/how-does-wmm-power-save-work

http://www.ti.com/l sds/ti/wireless_connectivity/embedded_wi-fi/overview.page

http://www.qca.qualcomm.com/ioe/low-power-w i-fi/

http://www.marketwired.com/press-release/GainSpan-Low-Power-Embedded-Wi-Fi-Achieves-Two-New-Wi- Fi-Alliance-Certifications-1608301.htm
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John Fenderson (profile), 29 Jan 2015 @ 9:44am

Re:
Just looked at the power usage history on my Samsung Galaxy S4. I leave WiFi on all the time, and it ranks as the 7th largest power drain, right behind "Device idle".
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Adam, 29 Jan 2015 @ 10:32am

So you missed the boat on hardware
I think one of the biggest issues in the american market is hardware. It's what locks people into carriers and keeps them there. Most people actually buy their phones from their carrier which is weird when you stop to think about it. It would be like buying your TV from your cable company. Or you microwave from your electric company.

What I envision is Google taking everyone to task on hardware by certifying a whole bunch of handsets from Asia and finally giving real high volume access to the american market for Asian manufacturers. There will be some sort of certified by google thing, and we will see hundreds of phone models available within a few years.
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Anonymous Coward, 29 Jan 2015 @ 9:54pm

Re: Re:
I only said that because every guide to longer battery-life I see says to turn off your wi-fi.
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Anonymous Coward, 29 Jan 2015 @ 10:02pm

Re: The Japanese Gov't hates Masayoshi Son
The Zaiinichi Ninja is about to make the US alphabet soup agencies shoot themselves in the head.

This is bad why?

And he's an expert at manipulating the rules and getting a corrupt and xenophobic bureaucracy to work for him.

Again, this is bad why?

The "alphabet soup agencies" all seem to be doing what telco tells them to do, or not do. If he can come in and give us good service for a good price I'm for it. This might be why Google went with him.
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edinjapan (profile), 30 Jan 2015 @ 2:10am

Re: Re: The Japanese Gov't hates Masayoshi Son
Actually it's VERY GOOD. SoftBank gives me a 1.5TB service for my home system and fast keitai service all for under US$40/month. We can have any phone that we want as well, as Softbank carries the largest number of brands in Japan.
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edinjapan (profile), 30 Jan 2015 @ 2:17am

Re: So you missed the boat on hardware
Japan is really bad when it comes to hardware, the Japanese Gov't sticks their nose in and makes it hard to get certified for non-Japanese companies. Before we could always count on the Gaijin to whine to the US and there would be action to force the markets open. That doesn't happen much these days. The US is too busy trying to get the Japanese to take their shoes off before boarding the airplane.
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John Fenderson (profile), 30 Jan 2015 @ 6:58am

Re: Re: Re:
Yes, but it's outdated advice. And you'll probably continue to see it being repeated for many years to come. Battery life guides seem to be very prone this kind of problem, probably because improvements in equipment and batteries have been so rapid.
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Anonymous Coward, 30 Jan 2015 @ 6:18pm

Re: Re: Re: Re:
^This.

Outdated, stale advice. And those guides also say to turn off Bluetooth and GPS. Waste of time. That'll get you another 4 minutes of battery life in a day while cutting into the functionality of your phone. The cure is worse than the disease. That advice only makes sense if something using BT or GPS is malfunctioning and keeping them awake. If so, fix the malfunction, don't turn off your phones features.
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Anonymous Coward, 31 Jan 2015 @ 4:40am

Re: Re: Re: The Japanese Gov't hates Masayoshi Son
All you dumb, whining Gaijin don't know what you are in for.

This makes it seem like he does terrible things just for his own personal gain. I.E. telcos.

Keitai? *Googles* Osaifu-Keitai? Sounds awesome.
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edinjapan (profile), 31 Jan 2015 @ 7:03pm

Re: Re: Re: Re: The Japanese Gov't hates Masayoshi Son
Of course he does terrible things for personal gain.

Terrible things like introducing really fast internet service and forcing KDDI and NTT to spend millions to catch up.

Making secret deals with Apple, Samsung and HTC to get their new phones first.

Hiring qualified gaijin and fast track promoting them instead of the "think in the box Japanese employees"

Building infrastructure so all Softbank facilities are 100% off the grid.

Creating a fund for Zaiinichi Koreans to help them start their own businesses.

Making joint venture with Bloom to build power generating stations in Kanto and Kansai without permission from the Japanese Gov't, TEPCO or KANDENCO.

Yes, Masayoshi Son is an evil, nasty person who will destroy Republicans, Democrats and fat, lazy, entrenched US TELCO's.
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Derek Kerton (profile), 23 Apr 2015 @ 1:40pm

Re: So you missed the boat on hardware
Dude: You can already go out and buy any GSM phone you want, slide in your AT&T SIM card, and start calling. That's not new.

The OnePlus One is currently the darling phone for people who want this kind of approach.

Fact is, almost nobody does it, though, because the US carriers subsidize their phones, and then make users "pay back" that subsidy in the monthly bill -- whether you bought their cheap phone or your own full-price phone. Thus, most people take the cheaper carrier-tweaked phone.

It is true that a Google MVNO will reduce the power of the subsidy in controlling phones. They will expect people to buy their own Nexus 6 phone, and not subsidize. Of course, they aren't the first. T-Mo already offers this, as do numerous US MVNOs.

But, the Google MVNO will have very specific and unusual hardware, software, and radio requirements. Both Sprint and T-Mo USA have oddball frequencies not consistent with the rest of the world. That doesn't make the combined network an attractive target for hundreds of phone makers. It requires a bespoke phone, which would not ship in high volumes for two reasons: your assertion that there would be hundreds of vendors, and the fact that Google has indicated it is not seeking large scale.
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