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Google To Become Wireless Virtual Network Operator?
[May 08, 2006]

Google To Become Wireless Virtual Network Operator?

TMCnet Contributing Editor

Internet search giant Google (News - Alert) will “increasingly pose a threat to US mobile operators by offering free wireless connection, supported by location based advertising in major US cities,” according to the latest study, “Google in mobile and wireless: Analyzing the impact and assessing the threat of the search giant’s market entry,” published by British industry analyst firm Visiongain.

The study contends that Google is set to become “a major player in the mobile search market, continuing its current strategy of partnerships with operators and manufacturers,” according to Visiongain officials.

The recently announced dual bid with Earthlink (News - Alert) to provide wireless coverage for San Francisco is seen by many as a testing ground for Google to assess whether location based advertising over free wireless is a profitable business model. Google will provide a service with speeds of around 300Kbps for free with locally targeted advertising, an advancement of the company’s current business strategy, while Earthlink will provide 1Mbps access for a monthly fee of $20.

If successful, Google might well decide to provide access to its free VoIP, e-mail packages as well as internet browsing, among other services, to major US areas by 2008.

With sufficient potential to expand operations throughout the US and into Europe, Google could become one of the first “Wireless Virtual Network Operators,” treading on the toes of the traditional voice business of cellular/mobile operators., the report says.

It’s a compelling idea. “The business case for WiMAX is adding voice,” Scott Wharton, Vice President Marketing, BroadSoft has said. “If you do data only, it’s hard to justify build-outs. Voice is a natural application.” And tech analyst firm Analysys has written elsewhere that wireless VoIP presents fixed operators, (wireless virtual network operators) and VoIP providers with “opportunities to disrupt the mobile voice market.”

“The argument that Wi-Fi and cellular are complimentary rather than competitive depends on who is operating the service,” comments report author Adam Walkden. “Google’s successful advertising based business model allows the company to offer services for free. If it can convert this business model to include local based advertising to Wi-Fi users, it poses a significant threat to mobile operators.”

Walkden believes that by providing free wireless networks, Google can attract new users while “keeping existing users on Google for longer. Targeting wireless users with local adverts will aid future revenue growth.”

This much was predicted back in 2002 by Datacomm President Ira Brodsky, who told industry observer Jay Wrolstad sending pictures with mobile calls or sending a resume over the phone are not “earthshaking applications,” but collectively “they will have a significant impact over time… Consumers have more things to do with their phones than they need, but they will find the applications they want to be more creative.”

The successful 3G business models will be integrated -- incorporating elements of multiple, basic models -- and fluid. Operators will be full-service, multimedia communications providers, a Datacomm report at the time predicted.

Wrolstad cited Brodsky’s opinion that wireless virtual network operators, such as Virgin Mobile, could be the big winners, “because they are not tied to the telephone industry's infrastructure and culture, and can customize the service rather than just reselling it.”

In Wrolstad’s words, Brodsky said “the best 3G business models also feature operators that establish relationships among local merchants and services, on the one hand, and specific geographic market segments, on the other.”

The Visiongain study shows that Google is aggressively pursuing the mobile search market, having already partnered with Motorola (News - Alert), Sony Ericsson (News - Alert), BenQ-Siemens (News - Alert), T-Mobile and Vodafone to provide mobile internet search facilities. Google will continue to partner with operators and manufacturers whilst improving its own mobile offering. Many of Google’s desktop-based services, such as email, calendar services and local services, are transferable to mobile and will be introduced to Google’s mobile package through to 2008.

David Sims is contributing editor for TMCnet. For more articles please visit David Sims’ columnist page.

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