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How could Google’s project Fi impact mobile operators?

By June 24, 2015 No Comments

Google, being Google, aren’t sticking to the normal rules of mobile business. The degree of success of Project Fi enjoys could cause some changes in the mobile market. They market their service based on three core pillars: The Network, The Plan and The Experience.

Google’s Message on The Network

“See how we use new technology to give you fast speeds, more coverage, and better connections to Wi-Fi”. The push to carry traffic over Wi-Fi will keep connection costs down and Google are also saying that they will automatically move traffic back to LTE if available Wi-Fi signals degrade. Having multiple mobile network partners as well as access to over 1M Wi-Fi hotspots in the US, Google talk about enabling customers to “tap into a network of networks”.

The Impact on Mobile Operators – There is already a strong move to look at carrying more traffic using lower cost transport – both Wi-Fi and LTE-U. As for data transport, as long as the service works the way it should then the customer doesn’t really care. And this is key ‘as long as the service is working the way it should’ and this involves ensuring quality of service before offloading traffic from LTE to Wi-Fi and knowing when to switch back again.

Google’s Message on The Plan

“Learn how we’re taking a fresh approach to how you pay for wireless and manage your service”. This involves a monthly fee of $20 for unlimited voice and text plus Wi-Fi tethering. On top of this data costs $10 for 1GB, $20 for 2GB and so on.  This same data charging applies to overages. Google are also promoting the message “never pay for unused data”. So customers who pay $10 a month for 1GB, but only use 0.5GB will get $5 credit.

Roaming fees also seem to have been abolished with Google fi offering the same charges for roaming usage as domestic usage in 120+ countries worldwide, i.e. $10 per GB. However, it’s worth noting that roaming data speeds are limited to 3G speed of 256kbps.

As for customer service contracts, there’s none. Customers can contract to purchase a phone (at present only Nexus 6) in instalments.

The Impact on Mobile Operators – the potential here is to get rid of handset subsidies and move to separate device contracts (as many operators are already doing), and look to get rid of two year service contracts. The ‘only pay for what you use’ message may be very attractive for a lot of consumers. Rolling over unused data is proving popular in the US, so it’s fair to say that there could be an appetite for this. As for roaming, many operators have been offering ‘roam like home’ packages. It’s also worth pointing out that Google Project Fi does not offer any shared data plans which have been very successful in the US mobile market.

Google’s Message on The Experience

“Discover how we’re enabling you to communicate across Wi-Fi and cell networks, and the devices you use”. Google are promoting interoperability and multi-device access. For example, on network experience, “If you start a call over Wi-Fi and walk outside, Project Fi detects when your signal becomes weak and seamlessly moves your call over to a cell network to keep the conversation going”. As for multi-device services, Google advises customers to use VoIP and messaging service on Google Hangouts on their tablets, laptop, etc., so that their Project Fi phone number works for VoIP on multiple devices.

The Impact on Mobile Operators – there’s probably a reason why this one is last in the list. The interoperability message is pretty much covered off in the network section above. As for Project Fi working on multiple devices using Google Hangouts, there’s not too much operators can quickly do about this. There was the Joyn RCS initiative from the GSMA a few years back and it’s fair to say that its success was mediocre at best. Maybe the market conditions have changed since then, but if mobile operators do want to offer a competing service to Google Hangouts, then the best way to do this is through partnering.

Of course the obvious attraction for Google is to increase its footprint in the mobile market. Google’s business is not about selling connectivity, they’re not even about selling products and services.  The more people using Google’s products on mobile devices mean more advertisers. If attracting new subscribers to Project Fi helps drive up usage of Google’s products on mobiles, this means increased mobile advertising and more revenues for Google.

Mobile operators could face a tough time if Google pitches up on their doorstep and goes after their customers with a low(ish) cost offer. Operators have the assets to ensure that they put up a decent fight if Google comes to court their customer base. First thing they have is the customer base itself – they just need to better engage with their customers as individuals in order for customers to see data as a value based service and not a commodity. They’ve got the tools to do this. The question is to mobile operators is Google’s Project Fi launched in your country, what would you do? Google are a global giant. If Project Fi goes well in the US market, it’s a fair bet that it might start in other countries, so operators need to start planning now.