A recent report indicates that Google is planning to offer its own wireless service, potentially shaking up the industry and bringing consumers better prices and more flexibility, and even catalyzing shifts to new models of connectivity. Amir Efrati reports for The Information that Google is preparing to sell a wireless service run on Sprint and T-Mobile’s networks, according to sources with knowledge of the company’s plans. Codenamed “Nova,” the project is led by Google executive Nick Fox, and Efrati expects the service to launch this year. Fox had reportedly looked at starting the service last fall, and some Google employees have already tested it.

As The Wall Street Journal notes, it’s unclear how widely Google will offer wireless service, how much it will cost, or even when it will go on sale. Quartz lists even more questions: How much will Google’s network rely on WiFi? Will Google offer “acceptable” customer service? Will its wireless service support or sell the iPhone, the most popular phone in the United States?

What does seem clear is that Google will try to offer more flexibility than the leading wireless carriers, AT&T and Verizon. Quartz speculates that in the long run, that could include features like data-only plans or free voice calls. A big hope for the service is that it will get big enough to push other carriers to improve their networks, pricing, and services. The company could start small, limiting the service to select U.S. cities, or exclusively to users of its Google Fiber broadband Internet service, which is currently available in Austin, Kansas City, and Provo.

To run its wireless service, Google is expected to buy wholesale access to the carriers’ voice and data networks to become a mobile virtual network operator, or MVNO. Under separate agreements with Sprint and T-Mobile, Google will resell service under its own brand name. As The Wall Street Journal notes, such agreements are common. Household names like Boost Mobile, MetroPCS, TracFone, and Virgin Mobile are all MVNOs that lease voice and data spectrum from major carriers.

How do MVNOs typically operate?

MVNO agreements are a standard and high-margin business for carriers, who can sell excess capacity on their networks and gain customers — all without the burden of the costs of marketing or signing users up. As The Wall Street Journal notes, many companies already operate as virtual wireless carriers. Most of them have remained small, and as Quartz notes, MVNO agreements have led to many expensive failures in the past, such as Mobile ESPN, Helio, Amp’d Mobile, and others.

But Tracfone, a budget mobile service owned by Mexican operator América Móvil, has been successful, with roughly 25 million subscribers, growing to the fifth-largest U.S. carrier by offering cheap service on other carriers’ networks. It’s worth noting though, that as Tracfone’s success exemplifies, the most successful MVNOs have targeted niche markets. Tracfone specifically targets the low end of the market.

The agreements with Sprint and T-Mobile would enable Google to offer wireless service without building and maintaining its own network, though it would still need to take on the tasks of customer service and billing, which it’s largely avoided by offering its advertising-supported services for free to consumers.

Despite the routine nature of MVNO agreements, the decision to sign one with Google is out of the ordinary. Google’s reputation as a potential disruptive force worried Sprint’s executives, and the decision went all the way up to Dan Hesse, Sprint’s chief executive at the time, and the company’s chairman, Masayoshi Son.

How will Google be different?

Google already has a strong position in the wireless industry thanks to its Android mobile operating system, which powers more than half of the smartphones sold in the U.S. Google also has the Google-branded line of Nexus phones, which are made by a variety of manufacturers. But Google relies on the support of carriers to sell those products, and the will likely take care not to disrupt those relationships as it moves into the wireless industry. (However, considering that Android devices occupy a huge share of the market, Google and its products are extremely important for carriers.)

What’s interesting about Google’s MVNO agreements it that they’re with carriers using two different wireless technologies. In the U.S., two of the four major carriers — Verizon and Sprint — use CDMA, while the other two — AT&T and T-Mobile — use GSM. GSM, short for Global System for Mobile Communications, has been adopted around the world, while CDMA, or Code Division Multiple Access, is most popular in the U.S. and Russia, with some usage in select Asian and African countries.

GSM phones are able to be unlocked and moved between carriers, but CDMA phones are often locked to a single carrier. Additionally, phones sold in markets that support both standards often come in a GSM version or a CDMA version, but few phones are compatible with both. It’s not yet clear how a service built on the networks of both a CDMA carrier and a GSM carrier would work, though there are radios that support both, and Sprint-based MVNO Ting is reported to be adding GSM support, likely through T-Mobile, according to Fierce Wireless.

It’s possible that customers could choose a Sprint-based or T-Mobile-based plan, or that the service could use both — an option that would likely necessitate the manufacturing of phones specifically for use on the service. Similarly, it’s unclear if Google’s wireless service will permit users to bring any compatible GSM or CDMA device, or if Google would offer its own selection of phones from which users would choose.

How will you benefit from Google’s entry into the wireless business?

Efrati characterizes the move as “the latest example of how Google tries to prod incumbents to change their business to benefit Google.” Along the way, Google’s wireless service is likely to benefit consumers, as well. As The Wall Street Journal reports, the move is likely to prod the wireless industry to cut prices and improve speeds. Google could leverage its influence to get faster, cheaper wireless service for more people as carriers respond to its move into the business.

As The Wall Street Journal points out, Google’s entry into the wireless business could cause headaches for an industry struggling with a price war and soaring costs. While Sprint is betting that the boost from an influx of new customers will outweigh the risk that Google could learn too much about the business, it’s reportedly hedging its bets by including a “volume trigger” in the contract, which would allow the deal to be renegotiated if Google’s customer base swells.

Writing for Re/code, Ina Fried notes that both Sprint and T-Mobile try to capture customers from larger rivals AT&T and Verizon by offering good deals. The approach may be working short-term, but likely won’t last in the long term. Tim Hoettges, chief executive of Deutsche Telekom, the majority owner of T-Mobile U.S., told Re/code that the business is unsustainable in the long term without greater scale.

While Google could be looking to drive prices lower, Fried points out that the wireless industry is already “doing a fine job of setting its business on fire.” Likewise, the move would be an inefficient way to get the latest version of Android into the hands of more customers, and it’s equally unlikely that Google is really trying to take on existing carriers. It’s possible that Google is exploring building an alternative network that relies mostly on WiFi — an approach taken in the past by Republic Wireless, which has a deal with Sprint for coverage when customers don’t have WiFi connectivity.

But the biggest benefits for consumers could come not just from its ability to shake up the pricing and speed that carriers can offer, and become more obvious when we look at the bigger reasons why Google might be pushing into the wireless business.

What motivations are behind Google’s Nova project?

The project is reportedly part of a broader push to increase Internet coverage, in which Google has a vested interest. As more people gain better and cheaper access to the Internet, Google benefits from their propensity to conduct searches, stream YouTube videos, send messages through Gmail, or text on an Android smartphone.

The Wall Street Journal notes that Google has been lobbying the Federal Communications Commission to free up vast amounts of low-quality wireless spectrum, which could be used to provide cheaper wireless access. While the airwaves can’t be used to transport wireless signal across long distances — and therefore aren’t of much use to wireless carriers — they could be useful in cities and handle much of the traffic that is currently carried and billed by companies like Verizon and AT&T.

In a recent letter to the FCC, Google said higher frequency spectrum could be used for “the next generation of unlicensed broadband services,” including both those that complement WiFi networks and “entirely new technologies and innovations.” During a September meeting, Google told an FCC commissioner, “The broadband ecosystem will be well-served by a policy environment that removes barriers to investment, discourages monetization of scarcity, and empowers consumers.”

The spectrum in question could figure in to Google’s wireless service, which might prioritize cheap or free WiFi networks, and route calls and data preferentially over WiFi networks, using the cellular network only when WiFi is out of reach. Jan Dawson, an analyst at Jackdaw Research, noted of Google’s push into the wireless business, “It’s probably an attempt to put pressure the carriers to improve their own products by showing new ways of offering service. When Google enters existing markets it tries to do things differently, rather than just doing something slightly better or cheaper.” That statement seems especially likely to hold true as Google looks to disrupt the mobile industry, where it could push to popularize new models of connectivity.

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