Google has announced plans to begin selling wireless service to customers across the nation with its own line own line of mobile phone and data plans. According to a report in the Wall Street Journal, Google has initiated two contracts, one with T-Mobile and another with Sprint, to further its plans in the wireless market. The Wall Street Journal report cited unnamed people familiar with the Google’s plans as its sources.
The goal of the plan is to expand internet access by offering low-cost, contract-free mobile data plans to customers in the United States. More affordable plans could be very beneficial to Google by bringing more consumers online. Google currently has the dominant search engine on the Internet as well as the largest advertising network. Google’s Android mobile operating system is the most widely used software on smartphones.
Google’s wireless service will run on infrastructure owned by T-Mobile and Sprint instead of creating its own wireless network. The deal with Sprint reportedly contains a “volume trigger” that would require a renegotiation of the contract between the companies if Google’s customer base rises past a certain level. Further details of the project, currently codenamed ‘Nova,’ will be released as the project progresses.
The wireless market in the United States is seen as being the most competitive globally. There are dozens of companies operating in the U.S. that resell wireless services from AT&T, Sprint, T-Mobile, and Verizon. It’s unclear how Google plans to sell its wireless services to smartphone owners or when the company is planning to launch the service.
Some are seeing the move by Google to be highly disruptive to the current wireless market.
Google’s service may be cheaper than what is available from other providers because turning a profit with the service may take a backseat to Google’s main business of selling advertising. Customers in the U.S. generally pay higher prices for wireless access than customers in other countries. The new service from Google could spur other providers to discount their services, offer better deals, and decrease reliance on two-year contracts to retain customers.