Dish Network and Google are in talks to develop a wireless service, the Wall Street Journal reported last week, that conceivably could compete with the most dominant carriers in the U.S. The story was confirmed by Seth Weintraub at 9to5Google, who said the companies are “deep into development plans” on an offering that would launch in the second half of 2013 and rout voice and SMS through VoIP while using traditional cellular towers to transmit data.
The move makes sense at first glance: Dish owns some very valuable AWS-4 spectrum that could be used to build out an LTE-Advanced mobile broadband network. Google, meanwhile, not only has very deep pockets, it also maintains a dominant smartphone platform in Android and a major manufacturer in Motorola. Combining Dish’s spectrum with Google’s experience seems like a no-brainer.
A Dish/Google tie-up faces some major challenges, however. Neither company has any experience operating a mobile network, and building a nationwide infrastructure to play catch-up with the major operators is a costly proposition with little chance of a big-time payoff. Also, any alliance between the two wouldn’t be a threat on a national level because Dish owns only about 40 percent of the spectrum of AT&T or Verizon, as CEO Charlie Ergen said just last month. To really make a run at the two biggest U.S. carriers, Dish and Google would have to find more spectrum either by finding another partner or by acquiring more spectrum elsewhere. And launching wireless service is a particularly big gamble for Google, which risks angering its carrier partners who have helped make Android the overwhelmingly dominant mobile operating system in the world.
Preparing to rock the boat?
Those hurdles are why I’m not at all convinced that Dish and Google are preparing to take on the tier-one carriers by launching a nationwide wireless service. Instead, I think the companies may be looking to upset the wireless apple cart with by focusing on several key markets with a disruptive service that challenges the traditional carrier business model. That kind of strategy is certainly no stranger to Google, which has a penchant for testing the status quo. And there are a few areas where the U.S. mobile industry is ripe for disruption:
- Handset subsidies and distribution. Google fired a shot against the carrier-dominated handset distribution model in 2010 with the launch of the Nexus One, which was sold directly to consumers without a subsidy. Sales sputtered for a variety of reasons, but launching a mobile service would give Google another chance to sell unsubsidized devices and explain to consumers just how costly long-term contracts really are. And it could build handsets that are compatible with some other networks, enabling users to buy phones and take them to other carriers.
- Offloading technologies. While Dish and Google are reportedly looking to transmit data through cell towers, they might also pursue Wi-Fi and other offloading technologies much more aggressively than traditional carriers. That strategy, which can reduce costs dramatically, is being pursued by disruptive players such as Free Mobile in France, where incumbent carriers have been forced to lower their prices to keep pace.
- Billing. The way we use mobile has changed dramatically over the last decade as data becomes all-important and voice conversations less common. A new carrier has an opportunity to do away with separate monthly “buckets” for voice and data, instead charging a single price – perhaps even employing a real-time, pay-as-you-go model.
- Open networks. The mobile industry remains a very siloed space where devices are singularly connected to the network (usually via cellular or Wi-Fi), and tethering gadgets together incurs additional charges. But a Dish/Google offering could partner with a company such as Open Garden, which helps users create and share their own personal mesh networks across devices. That kind of thinking has long been anathema to carriers who hate to cede control to users (or anyone else), but it could actually spur data usage and increase revenues.
A carrier powered by Dish Network and Google would have some very powerful tools at its disposal, and by focusing on just a handful of markets the companies could experiment with different services and business models without immediately drawing the wrath of incumbent operators. Few tech industries are as ripe for disruption as mobile is, and Google may be about to pick up its slingshot and take aim.