Google set to spur innovation in the telecom industry



Google is launching its own mobile network in the US, apparently threatening to become a powerful competitor to telecoms groups (such as AT&T, Verizon and other major, well-established U.S. services providers).


Reports of Google’s plans to become a mobile virtual network operator (MVNO) showed up a few weeks ago, when the company’s Product Chief Sundar Pichai referenced the unexpected initiative for the first time publicly during a keynote address at the Mobile World Congress in Barcelona, on March 3rd.


The move by the U.S. Internet company is motivated mainly by the will (and, to a certain extent, need) to innovate the telecommunication industry: the current environment is characterized by the very slow pace of innovation at incumbent telecoms companies (in particular, the ones mentioned above).


Google feels like such dominant players are preventing it from providing new services in established markets (mainly, the U.S.), while leaving unconnected users around the world out of reach, for example emerging markets such as India and China.


In particular, according to some analysts familiar with the industry, the US ranks below many European countries for broadband speed and affordability: such a situation could eventually constrain Google’s business model, which relies on getting as many people as possible online in the hope that they will then use its Internet-related services (mainly, its already widespread search engine and the market-leading advertising products).


“We have always tried to push the boundaries of what’s next”, said Mr. Pichai at the Barcelona event, stating what could be defined as the company’s motto.


Apart from what are the great expectations of the public, it seems that the strategy embraced by Google is not to compete directly by the incumbents: the industry is known for its large-scale (sometimes even prohibitive), up-front investments in networks and other types of infrastructures; moreover, the benefits would potentially be reaped only in the very long-run (without even considering the reaction by the other market participants).

“We don’t intend to be a network operator at scale” Mr. Pichai said. Martin Garner, an analyst at CCS Insight, says: “What we think [Google] is trying to do is push the existing carriers to speed things up, be more innovative and introduce new features”.


The Menlo Park-based company has been recently active in various projects: in particular, it is worth to mention the rising world of virtual reality, where the main competitors are Facebook Oculus VR and, more recently, Microsoft Hololens.


When it comes to Google, the motto is always the same: innovate.


 

WRITTEN BY EMANUELA ERBA & PHILIPP MARTYS FOR BESA

PLEASE DIRECT ANY INQUIRY TO AS.BESA@UNIBOCCONI.IT

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