Kerton: Will Google virtualize smartphones?

liz kerton

Liz Kerton

Last month, news broke that Google is working on an MVNO that will ride on the combined networks of Sprint and T-Mobile. This is big news, and many people discussed how this could be a low-cost service that uses the best available signal from the No. 3 and No. 4 carriers combined in order to get network quality close to matching the top two. This, in itself, is potentially disruptive, but Google is likely up to something more, and an MVNO may enable it to do something far more interesting.

Google has a history of pushing other players forward with small point solutions, such as Google Fiber in select cities, bidding in the 700 MHz AWS spectrum auction, autonomous cars, and farther-fetched efforts like balloon-based broadband. But an MVNO would not be a limited effort in these ways. By force of sheer economics, it would need to address as many consumers as possible, nationwide. This effort, unlike those above, is more likely to be a culmination of multiple prior Google projects: Nexus phones, Google Voice VoIP services, Google Hangouts text and video conferences, the Android OS, desktop Chrome OS and browsers, and of course its suite of Google apps for Android.

The Nexus 6 phone is already one of just a handful of devices with the right radios to roam on both Sprint and T-Mobile's frequencies. Imagine a Google MVNO (rumored to be called Nova) that disintermediates the phone, and instead makes the smartphone experience virtual, and able to appear on your desktop, your TV, your tablet, and of course your smartphone. Nova would be able to provision every subscriber with one phone number, which as usual becomes the user's mobile identity. But that identity can appear and be accessed on any compatible device.

Imagine if incoming calls rang your cellphone, but also your tablet and your PC. You could pick up from any of your devices. You could also forward that call to co-ring your home or desk phone. You could also text from any device, or start a chat on one device, and pick up where you left off on the other. None of this has been common to date, because mobile carriers tend to lock that phone number identity to the device and the SIM card in order to "own" the customer experience and leverage SIM security, but Google has no such incentives.

In fact, it would be cheaper for Google (in terms of wholesale payments to Sprint and T-Mobile) if users did more communications via PCs and tablets on Wi-Fi. Mobile phone research indicates that an ever growing proportion of mobile usage is happening indoors, and Google can lower costs by shifting that use to fixed broadband networks, much as Republic Wireless does by Wi-Fi offload…but also by shifting the activity from the smartphone to other fixed connected devices. In theory, in the future, you could cancel your cellular phone subscription…but keep the phone number, and use all the services on other free networks.

Users would be able to take their preferences, their content, their contacts and more with them, portably, from device to device. And of course, Google would benefit from an even deeper understanding of the user, and even better targeted ads. No doubt this privacy aspect will chill the enthusiasm of a number of consumers, but regrettably, nobody out there should assume that their mobile phone usage patterns are entirely private – Google MVNO or not.

Thus far, no single company has had this ability to control the entire product stack in this way, from handset device, through OS, to apps, to the network. Not even Apple has that much end-to-end control. There are consumer disadvantages to being thus locked-in, but as Apple has shown, there is also a greater ability for that single vendor to push through innovative solutions and services.

Many analysts have doubts about a Google MVNO, but many of these doubts are based on outdated weaknesses of Google. Today, Google has proven that it can produce handsets. Google delivers customer service to its Google Fiber subscribers. Google does not have the same advertising and subscriber acquisition costs as most other MVNOs due to its existing user base, massive reach, and millions of ad inventory slots it controls. As I wrote above, a Google MVNO could be highly differentiated from anything we've seen to date, and the deep-pocket company can easily finance Nova over the hurdles of growing to scale.

Google has many efforts. Some die on the vine, some linger and wilt, and some flourish. It will be hard to predict which of these categories Nova fills; however, Google is nothing if not ambitious. It seems unlikely that they would undergo the effort of an MVNO just to offer the same kinds of things we've seen before, but with cheaper mobile plans. I bet there's more to it.


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