Google Launches MVNO

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Google unveiled their wireless service yesterday afternoon. The service, called Project Fi, was initially reported in late January and confirmed at the Mobile World Congress in Barcelona, Spain, early last month. It was reported that Google was in talks with Sprint and T-Mobile to use their networks and operate as a mobile virtual network operator (MVNO). However, analyst reports indicate that this new service will make more change than dollars. Colby Synesael of Cowen & Company wrote, “As expected, Project Fi is partnering with Sprint/T-Mobile as the Google service looks to intelligently place the consumer on the best/strongest network available where possible (whether it’s a Wi-Fi hotspot or the Sprint/T-Mobile carrier 4G LTE networks). As such, the differentiator for Project Fi will be its ‘networks of networks’ where a consumer can make a call on a Wi-Fi hotspot (encrypted for security) and can seamlessly transition to either carriers’ LTE cell network as the consumer moves locations depending on who offers the strongest signal.”

“While Google may not be targeting huge numbers of subscribers, their entry into this market is very important, because it has the potential to disrupt the wireless industry in much the same way Google Fiber prompted changes in the cable and broadband industries,” said Rajeev Chand, head of research at Rutberg & Company, an investment bank focused on the mobile industry. (The Wall Street Journal) Google plans to only charge customers for the data they use each month, which “could put pressure on the industry’s prevailing model,” The Wall Street Journal explained. “Which is to lock up expensive spectrum then sell lots of expensive wireless Internet service—an approach Google executives have criticized in regulatory filings.” While Sprint is on board with Google using their network now, it’s been reported that the decision was made by Sprint Chairman Masayoshi Son, and former Chief Executive Dan Hesse. Google will operate as a mobile virtual network operator (MVNO), using Sprint and T-Mobile’s networks. Both Hesse and Son were hesitant about the deal but approved it because Google agreed to volume limits that would let the sides renegotiate if Google’s service grew too large.

April 23, 2015 |
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