Although details so far are fairly murky, Google has announced plans to sell wireless service directly to consumers.
The company has signed a deal with Spring Corp and T-Mobile US, but didn’t offer clarification on how widely it plans to offer the service, how much it will cost or when it will begin selling. Google may start small and offer the new service just to selected U.S. cities or to users of the Google Fiber broadband Internet service. However, analysts predict that the move may prompt other companies to increase service speeds and reduce their prices.
Google continues to expand beyond the desktop. The deal is yet another move by Google that shows that the company is looking to expand its reach beyond the desktop. Under separate agreements with both carriers, Google will be able to resell service on either Sprint or T-Mobile networks. It will allow Google to have a brand name wireless service without spending the time developing the infrastructure.
Google poised to enter a somewhat-chaotic industry. As the plans come together, Google will be entering a very fragmented and cutthroat industry. Wireless companies have been in ongoing price wars for consumer attention, and there are increasing costs to contend with as consumers look for faster speeds and easier connections. However, Sprint and T-Mobile are hoping that influxes of users through Google’s channels will outweigh the risks of having another competing entity.
According to people familiar with the matter, Sprint has put a volume trigger on the deal that will prompt re-negotiation if Google’s customer base increases past a certain point. The mobile virtual operator agreement (MVNO) was first pitched by Google to Sprint more than a year and a half ago.
Even though the MVNO agreements will make it easier for Google to enter the market, it will have to deal with customer service and billing duties that aren’t part of its other services that are supported by advertising.