Though Google has not revealed much in the way of details, the Internet search giant is expected to launch a WiFi/MVNO wireless service sometime in the near future. Based on limited comments from company executives and reports in the Wall Street Journal (see here and here; subscription may be required) and elsewhere, it seems that the service will:
- rely on a combination of WiFi connectivity supplemented by cellular connections provided via MVNO agreements, most likely with both T-Mobile and Sprint;
- initially be available only to owners of the Nexus 6 smartphone, built by Lenova’s Motorola unit, which was acquired from Google in early 2014.
Speaking at the Mobile World Congress held March 2-5 in Barcelona Spain, Sundar Pichai, Google senior VP of products, appeared to downplay the scope and disruptive impact of the MVNO service, known internally as Project Nova.
As reported by TechCunch, Pichai said “We don’t intend to be a network operator at scale. We are actually working with carriers.” And according to Wired, Pichai also pointed out that “[c]arriers in the US are what powers most of our Android phones [and]…[t]hat model works really well for us.”
Google may, in fact, have limited ambitions for Project Nova. But I suspect the cautious nature of Pichai’s comments reflects a desire to avoid prematurely upsetting the industry’s dominant carriers—whose customers purchase huge numbers of Android devices—more than it does a lack of Google-scale ambition for Project Nova. And the fact that Google won’t be operating its own network and will be “working with carrier partners” doesn’t mean Nova doesn’t have potential to seriously disrupt the mobile industry’s status quo.
I expect Google to approach Nova the way it approaches most new product introductions: start small in “beta” mode, then adapt to market developments. Sometimes this leads to products being killed, revised or merged with others (see a partial list here), while at other times it leads to aggressive expansion, as was the case with the Android operating system.
While there are parallels between Project Nova and Google Fiber, the company’s investment in local fiber optic networks, there are also important differences that could translate into much faster growth potential for Nova. The key difference is that Project Nova doesn’t require Google to undertake the time-, labor- and dollar-intensive task of building fiber networks city by city and block by block. As a result, while Google Fiber is intended to be a profitable business and is gradually expanding to more cities, Project Nova could allow Google to move very quickly and relatively inexpensively to deploy a nationwide service using other companies’ physical networks.
Having read a mix of pre-launch speculation available online (see excerpts below), I’m inclined to believe that:
- Pichai’s comments notwithstanding, Google is aiming high in terms of Project Nova’s strategic value to the company and its impacts on industry dynamics;
- Even if the project stumbles initially and/or needs substantial revisions along the way, Google will stick with it for the long haul and, over time, succeed in expanding its role and disrupting the status quo in the wireless communication sector.
Below are excerpts from online commentary that have helped inform this point of view. As always, comments are welcome, especially from those who see things differently.
Nexus + Nova = Disruption
In a March 5 post on the Android Police web site Jacob Long explains how initially limiting the service to “pure Android” Nexus 6 devices makes sense:
According to a new report from The Wall Street Journal, Nova will launch with a product lineup of one device: the Nexus 6. While this will come as a surprise to many, in retrospect it makes a great deal of sense. Knowing that Nova will switch between T-Mobile’s and Sprint’s networks along with a strong reliance on Wi-Fi, Google will need tight control of both hardware and software to ensure a smooth transition into a fairly new way of doing things…
Lollipop [the latest Android OS and included in the Nexus 6] has added the ability for different apps to prefer different types of networks; for instance, streaming services would need the strongest signal while apps that are light on data can be made to prefer Wi-Fi, even if the signal is weak. Likewise, we will probably see Nova leveraging T-Mobile’s Wi-Fi calling to improve service in the home and take pressure off sometimes spotty coverage.
Another aspect to consider is that to be compatible with T-Mobile (GSM) and Sprint (CDMA) at every spectrum, the hardware has to support it. The Nexus 6 is one of just a select group of devices that has all of the required antennae in every device sold to do this sort of switching between all types of North American network bands.
As Mike Dano notes in a March 6 post at FierceWireless:
[T]he introduction of a device and service that could automatically switch from one wireless carrier to another would represent a major innovation in the wireless industry which to date has specifically worked to tie devices to one carrier’s network in an attempt to prevent churn.
Techdirt’s Derek Kerton sees the combination of device (Nexus) and service (Nova) as opening new and important opportunities for Google:
Google’s Nexus phones have always been a success at pushing along the other phone makers and carriers, but less of a success in terms of sales volume. But the Nova network could change the outlook for Nexus sales…[U]p to now, Nexus phone functionality has been both driven by Google and also limited by mobile carriers. No sense building in features that carriers or their networks won’t support, right?…But what if Google were the carrier for its own Nexus phone? There would be nothing between the services it conceives and the customer. So, Google will sell more Nexus phones, and the phones will enhance the Nova network’s functionality. And all with low capital invested or risked, since Google owns neither phone factories nor network towers.
And in fact, the Nova network is just the “Nexus One of cellular networks.” Let’s not forget the Nexus One phone success strategy: Either Nexus succeeds and sells high volume, or it fails, but still pushes other stakeholders along towards Google’s market objectives. You can substitute the word “Nexus” in that sentence with either of: “Google Fiber,” “700MHz FCC Auctions,” “Android,” or “Nova” for that matter. It’s a great strategic play for Google: Heads we win…tails we win.
Looking ahead to integrated communications
Kerton also sees the Nexus/Nova combination as providing a powerful IP-based platform for an increasingly integrated suite of Google communication services:
[I]t makes sense for Google to jump into telecoms now, when an IP-only network is finally feasible. LTE provides the low-latency data connections required for VoIP. I expect Nova to be either all-VoIP, or at least mostly so. This lowers the operational expenses versus a conventional cellular service, which has to manage classic circuit-switched voice networks and an IP data network in parallel…
An unconstrained Google phone on its own network, running all-IP would unleash many of the company’s disparate services that have somewhat languished as orphans for years. Google Voice could be the entire voice component of the Nova network, featuring cheap worldwide VoIP, visual voicemail, and voice messaging a.k.a push-to-talk. Hangouts would be the default chat and SMS app.
In September, Google announced it would be integrating Google Voice into an updated version of Google Hangouts. That prompted commentary consistent with Kerton’s speculation from androidcentral’s Phil Nickinson. In a Sept. 10 post, Nickinson described Hangouts as “Google’s one-stop messaging service for mobile and the traditional desktop web.”
[Hangouts is] perhaps best known as a Skype alternative, giving you a way to talk to friends and family over video, in real time. But it’s actually much more than that, allowing you [to] have video calls with groups of people, and even broadcast your calls live with Hangouts on Air. (It’s what we use to broadcast the Android Central Podcast, actually.)
Hangouts is built in to every Android phone that has Google Play Services, and video chat is just one part of it. Instant messaging is another. And Hangouts actually is an excellent way to communicate with anyone who’s got a Google account. You get notifications in real time, can reply with ease, and shoot and upload pictures to one or many friends.
In 2013 Google added the ability for the Hangouts app to also serve as your default text messaging (SMS) app, replacing the “Messaging” app that also comes preloaded on your phone. So now you could have all of your messages — well, Hangouts and SMS text messages, anyway — in one place
And from Techcrunch’s Frederic Lardinois, also commenting on the integration of Voice into Hangouts:
As a part of this update, Google is also dropping the price of its international calls from Google Voice. Google’s rates were already quite competitive, but as the company told me, it’s constantly negotiating its rates, and that allows it to pass its savings on to its users now. For some countries, this means Google was able to cut rates in half (from $0.02 cents to $0.01 cents in some countries)…
So why this new focus on voice? “We think there is an important role for voice,” Amit Fulay, Google’s product manager of Hangouts, told me last week. “We want to emphasize people. The mode you use simply depends on the urgency level,” Fulay said. “We have text, video and voice. But that’s not where you start; you start with the person.” Google also found that its users would often make a voice call and then decide to step up to a full video call later.
While Google has often been criticized as being more focused on “algorithms” than “people” (at least relative to a company like Apple), potential market-blowback from this relative deficiency could probably be managed (and even minimized) by initially focusing Nova on the most Google-friendly market segments, which a Nexus-focused deployment seems likely to do. Then, as Nova’s functionality and feature-set becomes more mainstream-friendly, it could be expanded in ways that target a broader range of users, devices and applications:
According to Kerton, the potential scope of this expansion is pretty vast:
Where else does Google have ambition, and could the phone fit in there? The Android Auto efforts, perhaps? Connected home via its assets Dropcam and Nest? Why not. A Nova Nexus could easily be a hub inside a connected car, leveraging the car’s display with Android Auto…The Internet of Things? Sure, Google can be more creative, and offer very interesting pricing models in IoT, if it operates its own MVNO.
[W]hat about total communications convergence?… Google could take Chrome on the desktop, Google Apps on iOS devices, and Android tablets and reproduce the full range of communications services from the phone. Sitting at your desk, but forgot your phone at home? MMS, SMS, and other chat services would just pop up on your PC…And it’s not just computers that could access the phone’s features: your TV, your car… could each be virtual iterations of your phone. Suddenly, your “communications self” is liberated from this 5″ brick to which we’ve become so attached. Your “self” follows you, not your phone. Google has been working on many of these ideas for years. You can use Google Voice, and Google Hangouts on a smartphone and a PC, but it adds complexity for users because the phone still has another voice service, another SMS app, and phone number as its identity. That phone identity historically has been locked within a carrier’s garden walls. But with Nova + Android + Nexus, Google can remove the entire construct of walls.
To provide some balance to all this Googley bullishness, it’s worth reading a January 26 post on Project Nova by FierceWireless editor Phil Goldstein, entitled “5 reasons why a Google MVNO would fail.” In brief, the five reasons he puts forth are:
- Engineering phones and networks is difficult.
- Google would need to set up customer service centers and retail distribution, which are not its core competencies.
- Incumbent wireless carriers spend billions on advertising and have inherent advantages.
- The service would be undifferentiated, and the target audience is unclear.
- A lack of scale could push Google to pull the plug
Goldstein closes his post with the statement that “There are lots of opportunities for Google to transform telecommunications. An MVNO doesn’t seem to be one of them.”
As his comments excerpted above suggest, Kerton views these potential obstacles very differently than Goldstein (as do I). In addition to the points raised in the above excerpts, he also addresses the question “[c]an Google promote, market, and sell a device?”
[T]he company has learned a lot since the first Nexus One. The Play store is now much more polished, and it successfully sells devices every day. Google can easily promote its network and phones in its search results, or in millions of other ad inventory spaces that it manages. Support was a noted weakness of the first Nexus One, but even that has come a long way. Google now has a few years of experience in customer support through projects like Google Fiber. So, while support is unlikely to be a specific strength for Google, the bar isn’t really set that high, is it?
And though he may view Project Nova as a likely failure, a March 2 piece by Goldstein suggests that Sprint, believed to be a wholesale network provider for the service, may harbor concerns that Google’s Project Nova could end up being too successful from Sprint’s perspective:
Although the MVNO business model is widely used and commonplace in the wireless industry, and Sprint and T-Mobile have been champions of that model, Sprint is reportedly hedging its bet by putting a “volume trigger” into its contract with Google that would enable the deal to be renegotiated if Google’s customer base grew too large, according to the WSJ. It’s unclear whether T-Mobile has a similar arrangement.
With price competition and interest in deploying LTE in unlicensed spectrum intensifying among the top U.S. cellular carriers, and startups, cable operators and soon Google, launching “WiFi-first” and “WiFi-only” services, the U.S. wireless communication sector is entering a period likely to see intensified competition and innovation, with unlicensed spectrum playing a key role.
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