Google already dominates the internet search market, owning an estimated 80% plus of all online searches. It's competing in the online shopping business with Google Shopping. Then there's Google TV, which is being held back for a re-tooling before it gets re-booted into our living rooms. And not long ago, Google took on Apple's iphone and RIM's Blackberry with its hot-selling Android smart phone operating system.
Now, according to some, Google wants to become your telephone company as well. According to a report on CNN.com Money from David Goldman, Google already has the technology necessary to become a mobile provider like Verizon, AT&T, T-Mobile and Sprint.
Goldman writes that currently Google licenses its ultra-popular Android smartphone operating system and it is trying its hand at becoming an Internet service provider. But its biggest weapon appears to be Google Voice, a low-cost calling service that launched in May 2009. Just five months later, the service had 1.4 million users -- almost half of whom were using it every single day.
Google currently relies on the other carriers to sell and support its devices. But Goldman says that over the years, Google has been assembling the pieces that would allow it to be its own carrier. He notes there are rumors that Google is buying up "dark fiber," broadband cables that have been laid but are not in use. Google refused to comment on those rumors.
Goldman adds that in February 2010, the company announced that it will become an Internet provider of "ultra high-speed broadband" for up to 500,000 customers for a U.S. city. That project is still under development, but Google is about to start testing its service out at Stanford University.
Goldman says Google already allows people to bypass their mobile carrier's service because the new version of Android ("Gingerbread") supports VoIP Internet calling, allowing users to make calls over Wi-Fi networks. Android by the way is currently the fastest-selling smartphone operating system with about 300,000 new Android devices being activated every day. Android is free for device manufacturers to license, so it has caught on like wildfire. Google makes its money by driving search traffic on Android phones.
As for the phone market, Google began selling the Nexus One Android phone directly to consumers online. Even though it wasn't very successful, Goldman says Google has laid the foundation for a future in retail.
The key question according to Goldman is would Google really be willing to give up its strong relationships with the carriers, most notably Verizon -- the largest network -- to go head-to-head with them in the wireless space?
Goldman says it's probably not going to happen in the immediate future because Google relies so much on other carriers to adopt its software and drive customers to its search site. But down the road, Goldman says it's a real possibility.
The Federal Communications Commission recently declined to enact strong Net neutrality rules for the wireless community. That leaves open the option for carriers to continue restricting their subscribers' access to some of Google's offerings. Goldman points out that there have already been a number of battles. Verizon made Microsoft's Bing the default search engine in some of its Android phones, depriving Google of that coveted spot, and it took more than a year of fighting to make Google Voice available for iPhone users.
Not everyone agrees with Goldman. Forrester Research Analyst Jeffrey Hammond is quoted as saying, "While I think Google could become a mobile provider, I'd view it as a nuclear option." Hammond believes that as long as Google can get 300,000 new phones a day into customers' hands via the existing carriers, and as long as those devices allow consumers to download anything they want, there's no reason for them to compete as a carrier.
Also Goldman points out the extensive regulatory scrutiny Google would face if it were to become a wireless provider. It has very little customer service or retail experience. And becoming a telecom carrier is an expensive business that could weigh on its margins. But when you have as much money as Google has, are such expenses are hardly an obstacle.
