Google Could Provide Relief To Sprint, T-Mobile With Wireless Deal
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Google is already king of search engines. Now it's nudging its way into the wireless industry. According to several reports, Google is poised to enter into deals with Sprint and T-Mobile - two smaller carriers - to sell wireless service. News of Google's move first broke in the tech outlet The Information. NPR's Aarti Shahani has been in touch with Google and she joins us now. And Aarti, Google isn't providing any details, of course, but it's not denying this plan, right? They could become something called a mobile virtual network operator.
AARTI SHAHANI, BYLINE: Yeah, exactly. Google doesn't own its own spectrum and it didn't have to pay all those big infrastructure costs to lay down wires and build that stuff. But they can rent it in wholesale quantities from the companies that did. So Google would want to do that because more people on the Internet doing more on the Internet is always good for Google. And it could target Google customers like the subgroup of people who stream YouTube videos hardcore and generate some nice mobile ad revenue for the company. Now, T-Mobile and Sprint would be into that because they're not maxed out on their capacity. They've got network space that they're not using because they don't have the customers, so maybe Google gives them a fixed price - less than they would've made on their own - but at least they don't have to pay to get the customers. So in the short term, it could be a really good deal for them.
CORNISH: What about the medium or long-term? I mean, aren't T-Mobile and Sprint basically opening the door to a major competitor, right, someone who could come in and take over?
SHAHANI: Right, like Google the giant, right? Well, these companies are the third and fourth biggest providers and they're trailing behind the top two, OK, and that's key here. T-Mobile has had a for-sale sign on it years now and they wouldn't mind being bought out. And Sprint isn't quite in the same place, but analysts say they could be. So Google comes in through this very measured and manageable arrangement, test the waters - you know, is it worth building a new business here, dealing with customers, etcetera, etcetera. And if Google likes the feel of it, they can dive deeper and use that ton of cash they've already got to buy a carrier that's been struggling.
CORNISH: Is this bad news for number one and number two carriers, right, Verizon and AT&T?
SHAHANI: I mean, it very well could be, right? When you think about Google in the landline context - in land connections, Google built fiber in some places. And that became their toehold into the business and a way to drop the costs and offer higher speeds. And other Internet service providers are having to follow suit. And so this move right now that Google is making is clearly, in part, going to have an impact on Verizon and AT&T to feel more pressure on when they're already feeling a lot of pressure.
CORNISH: What might this mean for customers?
SHAHANI: You know, we don't know how far this is going to go, right? But in theory, this is going to change the wireless business as we know it. Right now, you sign up for a data plan and pay for the data, and it's in the interest of the carriers to keep the cost of that data up because that's the resource that they're selling. Google makes money from ad revenue. And on smartphones, short YouTube videos are the thing that people stream, so Google wants to get us streaming more. The company could subsidize the cost and recoup with mobile ad money. So it could be that what we really end up paying for is the advertising clicks - or revenue generated that way - and less on our monthly bill for data.
CORNISH: So what if they don't go that far?
SHAHANI: Well, if they don't go that far, this becomes, in the end, either, you know, a blip on the map of the gazillion things that Google tries to do and then decides not to do, or it could be something that pushes the current carrier market to compete more with each other or think of price plans that are better for us as consumers.
CORNISH: That's NPR's Aarti Shahani. She joined us from San Francisco. Thanks so much.
SHAHANI: Thank you. Transcript provided by NPR, Copyright NPR.