2015/1/28 20:10:11
Source: Web
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Mixed
in with news of a massive fourth-quarter loss at Verizon related
to staff pension costs, some decent revenue figures on Thursday: sales
were up 6.8% year-on-year in the traditionally-challenging final quarter of
2014, to $33.2 billion, meeting analysts’ expectations. Earnings per share came
in at 71 cents.
This all comes amid separate,
potentially worrying news for the two biggest leaders in wireless.
Upstarts T-Mobile and Sprint, whose
aggressive price campaigns have already been gnawing away at the margins at
Verizon and AT&T, are reportedly working on a re-seller agreement with
Google that could see the Internet giant jump into the wireless market and go
head-to-head with the two market leaders.
Google is planning to sell mobile plans
directly to consumers, managing their calls and mobile data over the
cellular network of Sprint or T-mobile, according to a report in The Information on
Thursday, citing three sources with knowledge of the matter.
Google will reportedly buy wholesale
access to those networks, effectively making it a mobile virtual network
operator (MVNO) like TracFone Wireless, FreedomPop or Solavei. Large carriers
sell wholesale access to their networks to MVNO’s and as a result there
are now said to be around 34 million connections to such networks in the
United States; an estimated one in every 10 mobile
connections in the U.S. is through a virtual operator.
The MVNO market has been quietly growing
for the last few years, making the U.S. wireless market steadily more
competitive (though it arguably still has a ways to go).
Google’s entry into the market would not
only mean the search giant can suck in new swathes of data from consumers
to help enhance its advertising business. It would also “heighten the
hyper-competition in wireless,” Pacific Crest analysts Michael Bowen and Trevor
Upton wrote in a note to investors Thursday.
“Google is one of the few companies in
the world today that has the financial and intestinal fortitude to change an
industry,” they said, adding that plan was clearly to take
market share from AT&T and Verizon.
Google has been making moves in the
wireless industry for a while now in a gradual bid to rival the
companies that distribute phones running its Android mobile platform.
It has previously partnered with Sprint to package Google Voice in the
carrier’s smartphones, and its Google Fiber project to bring gigabit internet
to a handful of cities in the U.S. always looked like a
potential stepping stone towards providing a wireless service.
Back in April 2014, executives at Google
had already been discussing ways to bring a wireless offering to cities
where Google Fiber was available, according to an earlier report in The Information.
At that time, Google had even discussed the MVNO idea with Verizon
executives, The Information said, citing a source close to the
matter. But it was unlikely then (as it continues to be) that Verizon would
give Google access to the 4G network it launched in 2010.
One upside for Verizon: A Google
partnership could lead to more congestion on T-Mobile and Sprint’s
fledgling 4G networks, worsening the user experience and leading many
customers to switch to the big incumbents. But that seems to be a risk the
upstart carriers are willing to take. “T-Mobile likely views this as just
another way to competitively ‘stick it’ to Verizon and AT&T,”
say the Pacific Crest analysts.
(Credit: Web)