Google Becoming a Wireless Carrier, Set to Partner With Sprint and T-Mobile, Could Compete With Verizon and AT&T

At a time when there is already price war pandemonium amongst major cell pone carriers, Google is looking to add fuel to the fire with a recent announcement that they could be offering cell phone service as early as 2018.

The move will probably have the top carriers a bit nervous about the new competition at the least, as Google has already proven its ability to corner literally every market it enters, grabbing a huge share of the browser market with Chrome and pioneering high-speed internet services with their Google Fiber network, which is set to cover nearly 40 cities.

Bearing in mind that Google has designed and sells the most widely used mobile software (Android with its associated apps), offers phones for sale online, and has even become an ISP (Internet Service Provider), it seems that the search engine giant has been gradually putting in place all of the pieces it needs to become full-fledged telecommunications provider.

But Why the Delay?

With apps such as Google Voice or Hangouts, consumers can already get a VoIP (Voice over Internet Protocol) phone number to make and receive phone calls over the internet. So what seems to have taken the Mountainview-based company so long to enter the cell phone service market? The answer is cell phone towers.

It would cost literally tens of billions of dollars and take years to build national coverage if Google Wireless had to establish its own network of cell towers. Here again, Google has shown innovation by approaching the smaller of the industry leaders (T-Mobile and Sprint) to contract coverage over their established nationwide cell phone tower systems. Such smaller carriers seem to be more interested in collaborating with Google than competing with them.

Although Google has refrained from making an official comment on the matter, it is reported that they are set to pay only two dollars for each gigabyte of data transmitted through their partners cell towers. This would keep the cost low for consumers while providing increased revenue for the smaller two of the top four carriers. However, the Wall Street Journal reports that Sprint reserves the option to renegotiate their contract if Google's usage gets too high.

Cheaper Service, But Will The Coverage Stand Up?

Currently there are other companies that offer competitively inexpensive cell phone service such as Wal-Mart, Best Buy and Staples, but Google Wireless will most certainly have an edge over those companies for some very good reasons.

First is the fact that most cell phone manufacturers and distributors need to license Google's Android smartphone operating system, the most widely used software in the market. This cost is necessarily passed on to the consumer in order for the carrier to realize a profit margin. Since Google already owns the license, it will not need to pay for use of its own OS and associated apps and programs. These savings can filter down to greatly reduced pricing at the end-user level, making it likely that Google could look to launch one of the most affordable cell services yet.

Does this move really worry the top four though? Some market analysts believe that the concern level is not that high at the moment because of big 4's current level of national coverage through existing tower systems. Although Google reportedly will be contracting coverage through Sprint and T-Mobile, it is also understood that their coverage is not as great as that of AT&T or Verizon, so it will be interesting to see if Google and its allies will be able to compete as far as coverage availability is concerned.

In the long run, there is a great amount of risk associated with providing wireless service, but Google's track record indicates they are up to the challenge. Will Google Wireless prove to be another success for an already legendary company, or will it go down in history as a massive failure? We should find out within the next 3-4 years.