It was widely reported that Google is looking at the MVNO market, with claims it already has a pilot underway in Spain. While this news was met with scepticism from some observers, it is not the first time that the internet giant has been linked with such a strategy.
As far back as 2007, way before Android was the success that it is today, it was suggested that the company was working with O2 for the launch of a UK venture, including the sale of Nokia devices with Google apps embedded. For a company looking to drive the adoption of its mobile Internet services, this would have been sensible: its apps would be positioned and marketed prominently, in a bundle which would also include data tariffs and handsets from the market number one.
And a 2006 email from Andy Rubin, Google’s head of mobile, noted that an MVNO could be something it could do in the “meantime,” as the company’s Android platform was some way from reaching the market. It was suggested that Larry Page, one of the company’s founders, may have suggested this option.
So what has changed in the interim? Well, Android has become the dominant smartphone platform, accompanied by the Android Market app store, and the company has bolstered its position in the mobile advertising space through its acquisition of Admob. It has successfully managed to extend the reach of its core search services to mobile, and network optimisation company Allot Communications said in July 2011 that its YouTube business accounted for 22 percent of mobile data bandwidth usage.
Without having to go to the effort of building and operating a network, or manufacturing handsets, or providing connectivity services to customers, Google has managed to position itself at the sweet-spots of mobile industry growth.
So why would the company want to create an MVNO? While it would give it a chance to earn some additional revenue from users’ mobile connectivity spending, this would be offset by the costs associated with the service provision. And it would also need to deliver customer service, which is not something it has shined at in the past.
Following its decision to retail its Nexus One from its website, Google was swamped by criticism when users started encountering problems with the device. It was widely condemned for failing to provide telephone support, instead falling back on email and support forums, and for passing-the-buck to its partners.
This is something that Google would have to address should it decide to become an MVNO. Certainly selling SIM cards over the web will provide it with a low-cost path to customers, and it will be able to use its existing brand and channels to customers to promote its connectivity products. But once a customer hits a problem, they will expect to receive similar levels of support to a traditional mobile operator or MVNO – and this will not be easy to provide from a standing start.
But sometimes, Google’s strategies seem far from obvious. With Android being the number-one smartphone platform, and with no sign of momentum abating, why would it decide to acquire Motorola? Certainly access to the Motorola patent portfolio is an attractive part of the deal, but the company will end-up competing with its partners, including HTC and Samsung – which have been pioneers as far as Android is concerned. Google has indeed said it would be a “disaster” to irk its device partners – so why go down this path in the first place?
And Android has certainly benefited from its multi-operator support, which has seen it grow up to become the main alternative to Apple’s iOS/iTunes/App Store proposition, with its integrated ecosystem which has made operators little more than connectivity partners. Should Google look to start competing in this market as well, it may find itself making powerful enemies.
The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members