Google Inc. confirmed plans to launch a U.S. wireless service, raising a new risk of tension between the Internet firm and the wireless carriers that support its Android mobile-operating system.
The service would be small-scale and not intended to compete with the four big U.S. national carriers, Sundar Pichai, the Google executive who oversees Android, told an industry conference in Barcelona. Instead, it would be intended to demonstrate technical innovations that carriers could adopt.
However small Google’s entry, the move by the creative and well capitalized technology company is likely to send ripples through a business long controlled by Verizon Communications Inc., AT&T Inc., Sprint Corp. and T-Mobile US Inc. The move is a strong signal that Google’s ambitions extend beyond selling advertising and services over the Internet to influencing how Internet access is delivered.
“You will see us announce it in the coming months,” Mr. Pichai said. “Our goal here is to drive a set of innovations which we think the system should adopt.”
The comments confirmed earlier reporting of the company’s plans. Google has struck deals with Sprint and T-Mobile to resell service on their networks, people familiar with the matter have said. Mr. Pichai said Monday that Google would partner with carriers to launch the service but didn’t name them. AT&T, Verizon, Sprint and T-Mobile declined to comment.
Google confirmed plans to launch a small scale U.S. wireless service and will announce details in the coming months. Lisa Fleisher joins MoneyBeat from the World Mobile Congress with details.
“This raises another tension point in the new complex friend-and-foe relationship between Google and operators,” said Rajeev Chand, head of research at Rutberg & Company, an investment bank focused on the mobile industry. “You have to wonder what the market-wide impact will be.”
Google’s planned service would sift through cellular connections from Sprint and T-Mobile and Wi-Fi “hot spots,” picking the best signal for routing calls, texts and data. Mr. Pichai said the service aims for seamless handoffs between Wi-Fi and cell networks to prevent dropped calls and automatically re-connect them.
Google says it is focused on improving the quality of wireless connections. But tapping Wi-Fi networks could reduce the amount of data users transfer across cellular networks, undermining a growing source of income for wireless carriers.
“If Google focuses heavily on cheaper data usage that would have downward impact on pricing for mobile operators,” said Neil Mawston, a mobile-industry analyst at Strategy Analytics. “This may go two ways: Lower priced data may encourage much higher data usage, which would be relatively positive for carriers, or Google may drive down data prices so quickly and it could chip away at mobile operators’ profits.”
Mr. Mawston said Google has a history of lowering prices in areas such as maps, email and Android itself, which is free for handset makers. It also challenged telecom-industry giants with its high-speed fiber-optic Internet service in a few cities. AT&T responded with higher speed service of its own.
Google’s move into cellular comes amid an industry squeeze, as T-Mobile and Sprint lower prices to boost subscriber counts, while the cost to acquire wireless spectrum rises.
The tech firm has to move cautiously, however, because it depends on carriers to help promote phones powered by Google’s Android software. More Android users mean more people using Google’s search, maps and other services. Android had 53% of the U.S. smartphone market in the last three months of 2014, compared with nearly 42% for Apple Inc., according to data from comScore.
Google has talked to carriers about its plans, Mr. Pichai said. He said its approach would be like the one Google adopted with its Nexus phones, which the company uses to demonstrate its vision for how Android should operate, even as the vast majority of Android phones are sold by other manufacturers.
“They know what we are doing,” he said. “Partners like Verizon, AT&T, T-Mobile and Sprint in the U.S. are what powers most of our Android phones. And the model works extremely well for us. And so there’s no reason for us to course correct.”
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