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Every year or so we see a report emerge claiming Google(s goog) is contemplating life as a mobile carrier, pitting itself against Verizon(s vz) and AT&T(s t) with its own voice and mobile data plans. So far nothing has come of them, but on Thursday a new report published on The Information (subscription required) maintains Google is once again bandying the idea about, though as per usual the sources are all unnamed.
I’m still very skeptical that Google really wants to deal with the expense and grief of being a mobile operator; when was the last time you had a positive thing to say about your operator? But in the last few years Google has demonstrated that it views connectivity as a crucial element to its business.
As is the case with Google Fiber, Project Loon, its work with white spaces broadband and even its investment in satellite broadband provider O3B, Google seems plenty willing to supply broadband where it feels the telecom industry is dragging its heels.
But even though the mobile operators are rolling out LTE networks all over the country, getting a resilient and consistent 4G connection still isn’t an automatic and the cost of that connectivity is still high. Maybe Google figures it can do better. And its experimentation with different wireless technologies show that it wouldn’t necessarily have to become a full-fledged mobile operator — erecting towers and buying spectrum — to pull it off.
Networks: To own or not to own?
The Information reported that Google seems to be considering two options: becoming a mobile virtual network operator (MVNO) buying voice and data airtime on another carrier’s network (the report stated Google has talked to both Verizon(s vz) and Sprint(s s)), or it could build its own infrastructure, leaning on its own fiber infrastructure and Wi-Fi.
The first possibility seems a bit far-fetched. If Google wanted to improve upon what the carriers are offering, simply reselling their services makes little sense. And while Google could build a kick-ass Wi-Fi network in its fiber markets, without spectrum and a cellular network of its own, it couldn’t come close to providing a truly mobile service.
There’s a third possibility, though: Google could do both.
We’re starting to see a new model emerge among competitive carriers that focuses on Wi-Fi networks first and uses cellular only to fill the coverage gaps in between. In France, Iliad’s Free Mobile is building a network of millions of Wi-Fi hotspots and femtocells on top of the gateways its residential broadband customers install in their homes. For everywhere else in between it relies on an MVNO agreement with Orange(s oran).
We’re starting to see that model appear in the U.S. as well with MVNOs like Republic Wireless and Scratch Wireless. The vast majority of mobile internet consumption is done indoors, particularly at home and work. If Google could tap that trend, it could carry the majority of its mobile data traffic over its own infrastructure and sell access relatively cheaply. It would still need to work with a mobile carrier to fill the gaps but only on a supplemental basis.
To go big, Google needs to go small
Still, why would a carrier deign to work with Google if it plans to compete against them? Google might have something it could offer in return. One of the most interesting projects that Google has in wireless — and one which has received relatively little attention — is its work with small cells.
For the last year, Google has been testing out an experimental network of the tiny base stations in Mountain View. Small cells basically insert a lot of capacity into a small area, and when clustered together they would tremendously boost the bandwidth available to all users in the area.
Google could go after new spectrum to build such a network, or it could partner with a carrier like T-Mobile(s tmus) or Sprint. Google could use their spectrum to build what it is known as heterogeneous network, which would layer dense high-capacity small cell clusters within their larger coverage-oriented macro networks.
We’ll see if anything comes of this; after all, we’ve been hearing the same rumors for years. But one thing is for certain. If Google does have ambitions of becoming a wireless carrier, it has a lot of options at its disposal.