Google is Huge. Its m-cap of $201 Billion Proves it. And it can Easily Grow Bigger by Conquering The Communications Industry, in toto, by Becoming a Telecom Operator. Question is – should it take The Chance?
There are however some challenges. First, infrastructure, which it lacks. Explaining one disadvantage, New York-based Jordan Monahan, Analyst, Goldman Sachs, tells B&E, “Google could use Android to encourage the concept of a single portable contact which could shift from cellphone to fixed-line phone to PC, depending on one’s accessibility. But Google does not own last-mile connections, so the telecos could drive up the cost of last-mile access to render a Google calling-plan unattractive.” Even 4G spectrum is not something with which Google is operationally familiar. If Google is to match investments in infrastructure made by US’ #1 carrier Verizon (with 93.2 mn subscribers), which has spent more than $98.1 billion on it over the past decade (including $10 billion for 4G spectrum), Google will have to invest 41.5% of its revenues each year, on stitching together just the skeleton for providing mobile services. Expensive, but not out of reach, considering that at present the company has $30 billion in cash balance. Also, if required, it can easily raise billions by dilution of shares, considering that at current level of m-cap, the company has to dilute only 1% to raise $2.01 billion!
But there is the dark side as well. Currently, Google’s Android OS is a craze amongst mobile manufacturers. Being an open source software stack, it does not have the liberty to anger the likes of Verizon and AT&T. In short there could be an attack on Google’s popularity if it decides to rise in the telecom services market. The Federal Communications Commission still does not have “appropriate” net-neutrality rules in place for telecom operators, that can prevent them from blocking Google from their subscribers. Quite possible therefore, that a repeat of Verizon making Bing the default search platform on its new Android launches (instead of Google) and of Apple blocking Google Voice from iPhone users for 18 long months (post launch), can occur, if Google tries to become an all-integrated player. So what’s the way out for Google, for whom a new dream could well threaten much of the very present?
With millions across the world already familiar with Google, what the company could do to live its mobile carrier dream, is to take the middle path – become a mobile virtual network operator (MVNO; similar to Virgin Mobile which was acquired by Sprint). While speaking to B&E from Massachusetts, Charles King, President of Mindspring & Pund-IT Services adds, “At this point, with the market changing so quickly – via the rapid growth of smart phones and emerging tablets – I think Google is best served by remaining as it is and not becoming a Mobile Network Operator (MNO). It is a trusted OS/services partner, which is an enviable position to have in such a market. It could however try its hands at the MNVO model.”
Google should not apply for a mobile licence, not bid for spectrum or bother about infrastructure. All it has to ensure is to work on a retail format to connect directly with end users, strike roaming deals with current operators, distribute voice minutes and data traffic and tie-up with third-party app-providers. Given that Google has been a master at handling marketing and dealing with end-users in the past, it could live its mobile carrier dream as a “virtual” operator. Not that Google cannot anger competition and become the largest US telecom operator. Cash it has and time too. But it has to realise that the power of possessing nuclear weapons is in “not” detonating them. For now, Google should let the Android magic work wonders and according to plan.
But there is the dark side as well. Currently, Google’s Android OS is a craze amongst mobile manufacturers. Being an open source software stack, it does not have the liberty to anger the likes of Verizon and AT&T. In short there could be an attack on Google’s popularity if it decides to rise in the telecom services market. The Federal Communications Commission still does not have “appropriate” net-neutrality rules in place for telecom operators, that can prevent them from blocking Google from their subscribers. Quite possible therefore, that a repeat of Verizon making Bing the default search platform on its new Android launches (instead of Google) and of Apple blocking Google Voice from iPhone users for 18 long months (post launch), can occur, if Google tries to become an all-integrated player. So what’s the way out for Google, for whom a new dream could well threaten much of the very present?
With millions across the world already familiar with Google, what the company could do to live its mobile carrier dream, is to take the middle path – become a mobile virtual network operator (MVNO; similar to Virgin Mobile which was acquired by Sprint). While speaking to B&E from Massachusetts, Charles King, President of Mindspring & Pund-IT Services adds, “At this point, with the market changing so quickly – via the rapid growth of smart phones and emerging tablets – I think Google is best served by remaining as it is and not becoming a Mobile Network Operator (MNO). It is a trusted OS/services partner, which is an enviable position to have in such a market. It could however try its hands at the MNVO model.”
Google should not apply for a mobile licence, not bid for spectrum or bother about infrastructure. All it has to ensure is to work on a retail format to connect directly with end users, strike roaming deals with current operators, distribute voice minutes and data traffic and tie-up with third-party app-providers. Given that Google has been a master at handling marketing and dealing with end-users in the past, it could live its mobile carrier dream as a “virtual” operator. Not that Google cannot anger competition and become the largest US telecom operator. Cash it has and time too. But it has to realise that the power of possessing nuclear weapons is in “not” detonating them. For now, Google should let the Android magic work wonders and according to plan.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
