Google is reportedly negotiating a deal that would let it provide wireless services that cost the same, regardless of where the customer is using the phone.
People who subscribe to Google’s upcoming wireless service may be able to use their phones without additional cost when traveling overseas, if reports over the weekend of the company’s plans are accurate.
London’s The Telegraph on Saturday reported that Google is in talks with Hutchison Whampoa, the Hong King based owner of cellular service provider Three.
The two companies are reportedly negotiating a wholesale agreement that would let Google provide wireless services that cost the same, regardless of where the customer is using the phone.
A Google spokeswoman did not confirm or deny the report, noting that the company does not comment on rumors and speculation.
Hutchison Whampoa is a major provider of mobile telecommunications and data services in several parts of the world. The company owns interests in mobile operations in Italy, the United Kingdom, Denmark, Ireland and other European countries and also in Asian markets like Indonesia, Vietnam and Sri Lanka
If the reports are true, it is safe to assume that Google is likely negotiating similar wholesale voice and data purchases with others in order to build a global wireless footprint, said Bill Menezes, an analyst with Gartner.
Google already is in talks to buy excess wireless capacity from Sprint and T-Mobile and use it to deliver services of its own in much the same way that companies Tracfone Wireless, Virgin Mobile and Boost Mobile do presently. Google is expected to use the so-called mobile virtual network operator (MVNO) agreements to offer low-cost prepaid and pay-as-you-go wireless services for customers in the United States.
“Google apparently has determined it can create a more cost-effective global footprint by buying wholesale access and structuring its own rate plans,” not just in the United States but elsewhere, as well, Menezes said.
Google has previously noted that it is not interested in going head-to-head with incumbents like AT&T and Verizon with the wireless service. While that might well be the case, there’s little doubt that moves like these are going to cause more than just a little trepidation for established carriers.
Google’s enormous wealth and resources give it the ability to deliver services that many are going to find as cost-effective alternatives to the wireless services provided by the established telecom giants. As Google has grown, the company has shown an increasing willingness to enable Internet connectivity on its own where it can rather than depend on others for it. The company’s efforts with its Google Fiber gigabit Internet service, its investments in communication microsatellites and balloon-powered communications networkare all part of an ongoing effort to deliver capabilities that allow people to access Google services more efficiently.
It’s likely going to be several years before the results of these investments bear fruit. But its something that rivals are going to have to pay attention to, Menezes said.
If Google’s negotiations with Hutchison are successful, companies like Verizon, AT&T and others that do not already offer a global flat-rate fee structure, are sure to feel the heat, he said.
“T-Mobile already offers such a structure, as does Vodafone through its Vodafone Global Red plans,” Menezes said. “However, Google’s scale as a global provider likely would bring greater pressure to bear than T-Mobile and Vodafone have done so far,” on Verizon and AT&T, he said.
“A deal with Hutchison to complement its reported deals with Sprint and T-Mobile instead would be a way to pressure overall cellular access costs lower across the board,” he said. That would make it cheaper for consumer and business users to access Google’s core services, such as search, advertising, content, anywhere they go, he said.
But independent analyst Jeff Kagan believes that Google’s impact on the major wireless carriers, if any, will not happen immediately. “We’ll just have to wait and see how this idea plays out in the marketplace,” he said.
“I don’t think this is going to make any real waves in the wireless world among other competitors, at least not at this early stage. Google will be watched closely,” he said. “But I really don’t expect any changes to the marketplace this point.”