It’s that time of year for predictions. Among those that we heard from some wireless industry professionals this year was one that particularly struck my eye. It came from Benoit Schillings, chief technology officer at Myriad Group, who suggested that some big brands, namely Google and Apple, will buy a major network operator.
This is where somebody usually says: “I don’t think they’re interested in becoming a service provider.” Or, “Are you crazy?” In a phone conversation, Schillings admitted to being one to stir up the pot, a “troublemaker” or contrarian if you will, and he had a little fun with his predictions. So just for fun, let’s explore the reasoning behind the idea of Google or Apple buying a network operator. Is it really that audacious?
Both Apple and Google have enough cash on hand to buy pretty much whatever they want, and both are expected to do more acquisitions in the coming year. Schillings points out that at $12 billion, Sprint’s market cap is somewhere around 3 or 4 percent that of Apple’s, at $294 billion. Google’s market cap at last check was around $189 billion.
Let’s be clear. I’ve never heard Google CEO Eric Schmidt say Google wants to get into the wireless services business. Many would agree that its attempt to sell the Nexus One earlier this year, without much by way of service support, was a big failure. But let’s remember there was a time when there would never be a Google phone, and low and behold, the Nexus One was born, which was followed more recently with the Nexus S. (Not a Nexus Two, it should be noted. Schmidt said there would never be a Nexus Two, but he didn’t say anything about the letter “S.” Ha Ha.)
Why would Google be interested in owning a wireless service provider? You have to figure that someone in Mountain View, Calif., must think about these things now and again. After all, it still plans to build experimental, ultra high-speed broadband networks in a community or communities. Where that happens is to be determined next year.
Owning a wireless network would give Google more control over its own hugely popular services, like YouTube. It could avoid some uncertainties around net neutrality and any potential “payback” that mobile operators might seek for excessive use of their bandwidth. Or it just might want to own a network to experiment with ways to further optimize spectrum and charge for services, like a giant-sized beta for mobile. Who knows?
Google was an investor in Clearwire, and it’s been heavily involved in influencing spectrum policy. I don’t see it buying one of the two biggest U.S. mobile operators, but who’s to say it couldn’t buy one of the smaller ones, or a Tier 2? If regulators question such a move, Google certainly could argue that there’s plenty of competition in the wireless industry. On the other hand, I guess it would then have to argue with itself over the definition of broadband service provider and all those technical details related to net neutrality.
Is it crazy to think about these possibilities? Maybe a little bit. But no one said crystal balls are always right.
Filed Under: Industry regulations