Google branches out to make headway in mobile networking

Google has adopted a clever and cost-effective strategy to go mobile – by taking the mobile virtual network operator route.

Google has long set the benchmark for disruptive services. By introducing search functionality, Gmail changed the way emails were used.

Google is now planning to deliver a similar disruption in the wireless space by launching an MVNO (mobile virtual network operator) service in the US.

However, this is hardly the first time Google has attempted a foray into telecoms territory. In fact, the company has been flirting with the idea of its own mobile services for many years now. In 2008, it bid, albeit unsuccessfully, to acquire wireless spectrum in the US.

Google has now adopted a clever and cost-effective strategy to go mobile – by taking the MNVO route. This will give Google the mobile legs it so desires, yet shield it from expensive network roll-outs. For this MVNO venture, Google is planning to use Sprint's and T-Mobile's network, paying the two carriers just a usage-based fee. This strategy will allow Google to offer mobile services at highly competitive rates.

Apart from the quality of its host network, an MVNO success depends on two important factors – branding and service proposition. To start with, Google is already one of the most recognisable brands globally.

On the services side, Google is working on introducing two innovations for its MNVO. Firstly, Google will allow voice calls over Wi-Fi, a technology that is still at a nascent stage. Secondly, Google will create a free mobile roaming zone, allowing subscribers to use services at affordable rates.

Google is working on a roaming deal with Hutchison Whampoa, which runs the mobile operator 3 in countries such as the UK and Italy. Under this agreement, Google Mobile users would be able to use wireless services at their local US tariffs, while roaming on 3’s network. This is sure to attract both business and leisure travellers, helping Google win early subscribers.

Launching wireless services will represent yet another step by Google to move down the mobile value chain, where it already enjoys a significant footprint. On the software side, Google owns Android, the biggest mobile ecosystem with more than 80 per cent market share globally. Then on the hardware side, there is the Google Nexus line of smart devices. Its only missing link was having a wireless service – now this is also set to change.

As Google expands its play within the mobile value chain, it would be able to garner greater insights about its users. This augurs well for Google’s core business – advertising. With more insights, Google would be able to better contextualise the ads it serves – leading to higher response rates and higher revenues.

Although it’s early days to speculate the threat Google will pose for the bigger carriers such as AT&T and Verizon, one thing is certain – competitive prices and better services from Google will be a cause of major concern for these players. The success of other MVNOs such as Virgin Mobile (UK) and Lebara (several European countries) attests to this fact.

However, Google also faces a tough road ahead towards making its MVNO a success. It’s not enough for Google to simply offer discounted services – it’s imperative to deliver on the highest quality standards, consistent with its brand image.

Mobile services, by nature, are prone to fluctuations and outages. This is even more likely for a new operator, which is still ironing out its network arrangements. Here, an outage could attract negative publicity, tarnishing the brand image.

At such times, providing effective customer services and regaining customers’ trust could be one of the biggest challenges that Google Mobile might be up against.

How Google manages these challenges will go a long way in determining the success this MNVO venture will register.

Abhinav Purohit is a UAE-based strategy consultant specialising in the telecoms, ICT and smart city domains.

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