The New Wireless Carriers.
Google & Apple: The New Wireless Carriers?
With Google Inc.’s recent acquisition of Motorola Mobility and the possibility of Apple providing data plans for iPads through iTunes, the customary wireless carrier landscape is changing rapidly. Of course there are many unanswered questions and there are many experts who speculate the feasibility of such a profound change.
In this post I’ve looked at some of the questions around a move like this from either company.
Where will the spectrum come from?
Since neither Google or Apple own wireless spectrum they would have to purchace spectrum from other carriers or prehaps at auction when the FCC reallocates it from the bands currently allocated to other uses. At CITA 2012 FCC Chairman Julius Genachowski announced plans for the FCC to make 500 MHz of spectrum available over the next 10 years, opening the door for Google or Apple to potentially make a bid towards some of that (especially with their large stockpiles of liquid cash).
Could Google or Apple purchace a carrier?
In a word: “No” (probably). The loss of good will and additional challenges of purchacing and running a mobile carrier is unlikely the best path for Apple and Google to provide any kind of wireless service. This would mean that Apple or Google would have to deal with all the current customers of the carrier who are using different devices and legacy technology, and I don’t really see Apple supporting people still using flip phones, and certainly not Android phones. Carriers also support multiple services and options that these technology companies wouldn’t care to deal with such as pre-paid vs. post-paid, and varying voice/data levels. Additionally, the backlash of the customer base and good will of other carriers would be negatively affected, not to mention the monopolistic nature of the move.
Where will the radio and core infrastructure come from?
Another big problem is both company’s lack of physical infrastructure. While Google has started projects to build out fiber networks that could potentailly be used for backhaul and transport of wireless services in Kansas City, they don’t have any radio infrastructure to support transmission to users, and are a long way from having a national (much less worldwide) network. Apple on the other hand has no infrastructure that could be used for this purpose and so far hasn’t shown any inclination to start building one.
Additionally, the core infrastructure for billing and user management doesn’t exist completly either. Both companies have relatively good platforms for managing their users (Apple’s mobileme – now iCloud – and iTunes; Google’s Accounts and Google+), but don’t have a core billing infrastructure for wireless service and the necessary applications to facilitate all the transactions.
Will customers come?
There’s the saying “if you build it, they will come.” But will this hold true for these tech-giants-made-wireless-companies? It’s hard to say. Currently Apple’s iPhone holds 43% of the US smartphone market and Google’s Android platform holds 48%, however, the chances that the creation of an Apple or Google Wireless company would pull that whole market under the same umbrella is unliekly, especially with most customers being locked into 2 year contracts with their current providers.
We also have to consider that neither company has ever done this, and it falls well outside their core competencies. Apple is great at design, marketing and even customer care; but building and maintaining a national wireless infrastructure, wireless plans, and competing in the race to LTE (not to mention that the iPhone 4s isn’t even LTE compatible currently), probably not. Meanwhile, Google is great at innovation, open development, and of course, search. However, Google doesn’t have retail outlets, customer support, or a sales/subscription platform (such as iTunes for Apple).
So what’s next?
This is the hardest question to answer, and obviously we will have to continue to watch how all the parties continue to interact over the coming years. If either Google or Apple decide to move into the wireless carrier market it will be big news and certainly make some waves with the status-quo. It is a huge risk for either company and will certainly require serious consideration before either makes any firm plans for this kind of announcement. In the short term we may see more binding agreements between Google/Apple and the major carriers or options for extended services for iPhone or Android devices, but I wouldn’t expect to be signing a new 2 year contract with Apple Wireless before the iPhone 5 comes out!
Please feel free to weigh in with your opinions or thoughts on this topic!