July 31, 2007 4:00 AM PDT

Google bets on mobile market

Search giant Google is setting the stage for its biggest push yet into the U.S. mobile market, in a strategy that delicately straddles the line between partnering and competing with the major cell phone operators.

Last week, Google signed its most significant deal with a U.S. wireless operator to date. Sprint Nextel will integrate the company's mobile services with the carrier's new 4G WiMax network.

But in a move that could pit Google against wireless operators, the company recently announced plans to bid in the Federal Communications Commission's upcoming 700MHz wireless spectrum auction. Google is also continuing with its plans to build free citywide Wi-Fi networks in San Francisco and Mountain View, Calif.

The recent activity has many Google watchers speculating about the company's ultimate plans. Will it build its own wireless network using spectrum from the upcoming auction? Or will it strike more deals like the one it signed with Sprint Nextel? Will it come out with its own Google phone that will take on the likes of the Apple iPhone and other manufacturers like Motorola and Nokia?

Danny Sullivan, editor of Search Engine Land, says Google's moves in the wireless auction, WiMax with Sprint and its citywide Wi-Fi projects are all extensions to the company's existing business, enabling bandwidth for applications such as YouTube.

"They have real concerns that carriers will restrict access to their own services, and if they can't deliver those services they lose money," Sullivan said. "So if they can change the rules, or have the bandwidth themselves, they can go directly to consumers with that stuff. Now Google owns one of the big bandwidth hogs of the Web, YouTube. That sucks down a lot of the bandwith that's out there."

Google says its plans, whether they be to partner or to possibly compete with cell phone carriers, are all about providing Internet access.

"Mobile is the fastest and cheapest way to reach the largest number of people," said Chris Sacca, head of special initiatives at Google. "There are billions of people on this planet who still don't have access to the Internet. And we think mobile presents the biggest opportunity to get them on the Internet."

But the company has been tight-lipped about specific plans for building out mobile access. And now it seems to be hedging its bets between a strategy of partnership and one that puts Google in full control. So while it rails against the phone companies at hearings on Capitol Hill or within city halls, the company is also trying to strike deals with these same operators behind closed doors.

U.S. cell phone operators have traditionally viewed Google with some trepidation, not knowing if the search giant is a friend or foe. As a result, some--like Verizon Wireless and AT&T--have been reluctant to add Google's mobile services directly to their service menus.

Google has struck deals with large mobile providers in Asia and Europe, such as Vodafone and China Mobile, but Sumit Agarwal, product manager for Google Mobile, admits that wireless operators in the U.S. have hesitated when it comes to embracing Google as a partner. Still, Agarwal believes that U.S. cell phone companies will soon come around.

"There are billions of people on this planet who still don't have access to the Internet. And we think mobile presents the biggest opportunity to get them on the Internet."
--Chris Sacca, head of special initiatives, Google

"Our intention is to work with all our global partners to bring together all the services that provide huge value for mobile users," he said. "Of course, there is a natural resistance to change from some operators. But carriers are smart and savvy. They see the direction that they need to go, and they're willing to do it."

Since November 2006, Google has had a relationship with Sprint to integrate some of its mobile applications, such as mobile Gmail, directly onto the Sprint wireless menu. Google has struck similar relationships with other U.S. operators like Helio, Leap Wireless and Kajeet.

But this latest deal with Sprint takes the relationship a step further, integrating more pieces of Google's technology into the wireless service and providing a potential outline for future deals with carriers. For example, Sprint plans to combine its location technology with Google's search tools, e-mail and chat to provide location awareness for users.

This means consumers could use Google to search for a local coffee shop, for instance, without having to enter an area code. They could also automatically broadcast their whereabouts to friends when they are setting up a meeting using Google Talk instant chat service or e-mail on their phones.

"What we have on the cellular side with Sprint is a simpler and less sophisticated integration," Agarwal said. "But the new 4G relationship gives the applications more prominence. It's more user-centric and tailored for personalized use."

But clearly the biggest gamble that Google is taking with its wireless strategy could happen in January when the company is expected to bid on licenses in the 700MHz spectrum auction.

CONTINUED: Battle for wireless spectrum…
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Chris Sacca, Google Inc., Sprint Nextel, bandwidth, cell phone


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Add your comment
If Google wants to succeed, they must drop Sprint
Just like Sprint drops calls, Google must drop Sprint. Even partnering with Sprint is going to set Google back. Yes, I know Google is using the data network, not voice. It doesn't matter, Sprint is by miles the worst cell carrier in the world. If Google partners with Sprint, this will Google biggest failure.
Posted by i_am_still_wade (250 comments )
Reply Link Flag
cell and datanetworks
Well, from your comment it seems like google is going only for the data networks part - for which Sprint is pretty good. (Believe me as I worked for Sprint - but not so much prejudiced for it!)

I do not know the full technicalities of the deal, but yet fail to understand how, going for only the datanetworks part Google is planning to leverage cell phone market.

And I guess sprint has got out of dropped call problem by now... :)

atul kumthekar
Posted by atulkumthekar (13 comments )
Link Flag
propergative wave dynamics
to propergate your wave the furthest you'll need to account for the subtle energy dispersion better and also work on the hamonics better.
see what basveo can do for you google.
Posted by wildchild_plasma_gyro (296 comments )
Reply Link Flag
Sprint and US carriers in general
If Google can go solo they should. All US carriers are out of step
with the global cell phone industry. They have left the the US
woefully behind in mobile technology.
Posted by casevos (2 comments )
Reply Link Flag
Way to go Google!
On what data do you base your opinion that Sprint is the worst carrier in the world?

I have had Sprint for years, do a lot of traveling, and have no problems with the service.

I think this is a great move for google.
Posted by joej25 (4 comments )
Reply Link Flag
GOP Chickens! Or should it be sickos?
The GOP candidates know that they are NOT on the same page of the majority of Americans. IMHO a CNN sponsored YouTube debate would be disaterous for them.

These old school gus are on the way out. The GOP needs to be re-worked to serve the people's interest not just the rich and big money.

Also, it is so ironic that the party that screams the most against big government (GOP). Is in reality all about the BIGGEST government. And it does not function worth a ****.

And let us not for get the "Moral Majority" LOL. Yeah the GOP has the most moral polititians. What a freakin' joke. This GOP party (and many of its hig-profile supporters) is the party of hypocrits and perverts.

These nuts are also spending our nations future on foreign nation building, financing war, demanding and pledging MORE defence spending. America supports 700+ military bases. Not only that but the US also out spends the other world military powers (all lumped together) by many times. JUST LOOK AT ALL THAT MONEY THAT COULD BE USED IN OUR OWN COUNTRY!

Why are my fellow Americans the most terrified country/people in the world? We does our country NEED to dominate every single world crisis.

Things are very currently going wrong in America.

One more thing to the GOP. Since it is obvious that you are all on drugs (and perverted acts). Listen to the words of Nancy Reagan and learn to "Just say no."
Posted by onlyauser (220 comments )
Reply Link Flag
SORRY! I do not know how my political post ended up here.

SORRY! I do not know how my political post ended up here.
Posted by onlyauser (220 comments )
Reply Link Flag
Google knows what they are doing
I doubt very much that Google is planning to manufacture their own cell phone nor will they become a service provider ? can you imagine multi-colored Google cell towers covering the landscape?.(I can picture the sight? but I seriously doubt it will happen).

Google is essentially a media company generating revenue from advertisements. They provide content and applications for the benefit of mankind and make huge profits in return.

Google sees cell phones as a great place to imbed its applications but the largest players in the field aren?t playing ball. What is Google to do?

Up until recently there wasn?t much Google could do, a handful of cell phone companies own the airwaves and act like little dictators. But now that the 700 MHz spectrum is opening up Google has a chance at something??try to open up the playing field as much as possible so that they can implant their software on more cell phones.

To this effect Google is winning the battle and will probably win the war. Already the FCC has mandated that 22MHz must remain open to any and all cell phones or applications. Without spending a dime Google applications are now on 1/3 of the spectrum!

The FCC has also predicted that the auction will generate about $15 billion. Google has declared that it is prepared to bid about $4.6 billion or 1/3 of the estimated total. Since Google has already locked in 1/3 of the spectrum to its applications it can dedicate the billions of dollars to the remaining spectrum and purchase an additional 22MHz bringing the total spectrum that will support Google applications to 2/3 of the total 66MHZ.

Once Google owns the 22MHz, they can lease it out to smaller companies with the condition that access is kept open for Google applications and bandwidth for all those lucrative advertisement dollars.

With two thirds of the coveted 700MHz open, I doubt that even the big players will be able to resist the competitive pressures and will have to open up their networks. At this point, Google is declared victor and the consumer is saved from the "freedom hating" cell phone oligopoly dictators!
Posted by troy789 (2 comments )
Reply Link Flag
Very good points. I am curious about something though.
Is that how the math will work?

If Google gets 1/3 of airwaves, and 1/3 of the remaining 2/3 must be open, 5/9 of the airwaves must be open to Google applications/services.

However, Google's strategic alliances may allow Google applications/services to run over more than 1/3 of the 2/3 of the airwaves Google does not own. Perhaps 1/3 of the 2/3 will immediately and voluntarily allow Google applications to run. So Google might run on 1/3 + (1/3)*(2/3) + (1/3)*(2/3)*(2/3) = 3/9 + 2/9 + 4/27 = 19/27 of the wireless airwaves - more than 2/3.

Or are my assumptions incorrect?
Posted by exapted (2 comments )
Link Flag
With whatever plans that Google has in the long run. It will be interesting to see if this is all just a plan to monopolize or to be position themselves in every conceivable market & avenues of monetization. I think its great that Google is proactive & not just idling to see whats going on, but to take action & see who is responding. For us marketers its good to know whats going on with the big giants online & mobile.
Posted by SuperFloor (1 comment )
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