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Google announces death of mobile operator business model. Finally! [insert hope here]

On Day 2 of Mobile World Congress, it happened. The Earth moved. Mountains rose. Valleys shifted. Islands disappeared. All metaphorically speaking, you understand.

Google has announced that they’re getting into the mobile network game.

But don’t panic!

Don’t panic Mr Mainwaring!

You see, Google did the announcement quietly. It wasn’t a full scale Google I/O style broadside keynote. It’s just an experiment.

Nothing might come of it.

Let’s all do a big wink.

The FT’s tech team covered it nicely in their article (“Google to launch small US mobile network” – subscription required).

Here’s how they quoted Google’s Sundar Pichai:

“We have always tried to push the boundaries of what next. It is a project we are doing,” he said in a speech.“We don’t intend to be a network operator at scale,” he said. “We will do it at a small enough scale and hopefully people see what we are doing and carrier partners, if they think ideas are good, can adopt them.”

Just remember who Sundar Pichai is. He’s one of the top product chaps at Google — often referred to “number two to Larry Page”. He has a seat at the very top of Google. He owns Chrome, Google Apps and Android in the company. Keep that in mind whilst you evaluate his words.

He might as well have said:

“We’ll have a little look and see if it works out… which it will. And when it does, we’ll turn it into a multi-billion dollar business and nail the existing network operator economics.”

OBVIOUSLY Google is going to get off, big time, on the data they’ll collect. We know this. Android already ensures Google can collect ridiculous amounts of metrics. Just look at how powerful (and how useful) Google Now is becoming. The whole Android-Chrome-Google-Services piece does lack access to the underlying service layer though. With access to the phone’s cell-tower-location telemetry, they could really go to town, especially since they can start to query your location whenever they want without any battery impact.

Juliette writing in The Guardian included this gem:

Subscribers of Google’s “virtual network” will be able to switch seamlessly between mobile phone and WiFi signals, and between the masts of competing mobile phone networks, as their phones seek out the best signals. Dropped calls may also become less of a nuisance, as phones will automatically try to redial the number should the communication be cut mid conversation.

A dropped call that automatically reconnects? 😉 This, sadly, is how rubbish the current mobile experience is for us all. It’s a bad day for mobile innovation when the idea of reconnecting a dropped call is a feature that seems simply amazing.

Here’s another quote from Juliette’s piece:

“We are creating a backbone so we can provide connectivity,” said Pichai. “We will be working with carriers around the world so they can provide services over our backbone. We want to focus on projects which serve billions of users at scale and which make a big difference in their every day lives.”

Yup, don’t worry operators. They’re not competing with you. They’re just intending on ‘working with you’ to convert you — properly now, no messing about — into the bit pipes you already are.

If I was an operator executive reading these words, the panic would be slowly rising.

The minute you get a phone call from Google offering you a guaranteed sum of money for “airtime” connectivity… ouch. That’s going to be a difficult conversation. Not least, if they don’t bother phoning you in the first place and instead stick the money into your smaller, but more nimbler and more flexible competitor.

I am, of course, into full speculation mode now.

This is what I’ve been waiting for though. For quite a while now it’s been a boring conversation. The market rate for ‘unlimited’ in the United Kingdom is about £20ish a month, depending on the commitment terms. That’s using Three as the model. I think it’s about £20/month I pay for more or less everything. Genuine unmetered data, texts (WHO uses texts any more??) and calls. And that includes roaming internationally to a growing list of countries (more on that in another blog post).

So fag-packet calculations would indicate that Google could probably buy a £20 package for £5 per user. Or, let’s be charitable to the mobile operators, let’s assume a 50% discount. So assume ‘unlimited everything’ costs Google £10 per month. And further assume they choose to retail it at £10 or £11/month. (Or worse, but unlikely… free!)

It doesn’t take much for me to start thinking, yeah, I’ll get my mobile services from Google. Not from Vodafone or Three. Quite quickly you can see a time whereby the actual operator becomes totally irrelevant.

But what would Apple’s strategy be? How would they respond to Google hoovering up network access to offer to customers?

This is perhaps the most interesting point with today’s announcement. I’ve set out some semi crazy ideas above that are a stretch. I recognise this. I’m shooting the breeze.

However, you and I know that right now, some very serious people are currently pouring over this announcement. They’ll have already been carefully monitoring every public mention of Project Nova (the name for Google’s ‘operator’ thing). They’ll have been wargaming and strategising themselves. Some of them will have been shocked by the announcement, others will be gratified — because either way, the whole ‘operator’ issue has now shot to the top of the agenda for next month’s board meeting.

That, dear reader, is what I find most stimulating.

Sundar may well be entirely serious in his desire to do a bit of experimenting with “Nova” — like what they’ve done with Google Fiber. If you’re lucky enough to live in the selected area, good news. But if not, well, BT and Verizon aren’t quite running for the hills.

So allowing for the possibility that Nova goes nowhere meaningful (in my ‘industry agitation’ terms anyway), the most interesting point is how the other key players react.

When you’re reading in mainstream media that “Google is launching a mobile network”, you know there will be some cut through to the senior management.

Or, more influentially, there will be cut through to the wives, girlfriends, partners and friends of the senior managers at all of the big names across the planet. Dinner parties and golf games are going to be filled with questions for these executives.

“So Charles, what are you guys going to be doing about Google’s new mobile network?”

There’s nothing to worry about in the short term.

I was pretty tickled by the manner in which Sundar pitched things — “don’t worry, we’re just experimenting”. Gmail was an experiment. 😉

Will every Nexus phone come with a free data plan?

Will Google finally fix the SIM card problem and give you multiple SIM cards all with the same ‘number’ so you don’t need to mess about with five different price plans for your devices?

Will you get your data plan free if you’re a Google Apps subscriber?

How will the millions of existing Google Apps businesses react when they’re given the option to swap all their mobile services to Google for ‘free’ or for some standard easy monthly fee?

The services, the infrastructure, the hardware — virtual SIMs, the whole kit and caboodle all exists.

There’s never been a better time to be a Truphone shareholder I imagine. If Google’s not interested, with a bit of flexibility from the Truphone shareholders, there could well be a queue of other players keen for a quick leg up into the mobile operator business.

But mostly… what will Apple do? Amazon? Yahoo? Facebook?

So tongue firmly in cheek, yes.

It’s fun speculating, isn’t it?


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