Google Is Becoming A Wireless Carrier

Google

We’re around the corner from the day when you can buy your phone and not need your typical companies for service.

Per CNN Money:

Google will start selling cell phone service along with its Android phones, according to multiple news reports. This has been a long time coming.

For years, Google has been assembling just about all the pieces it needs to become a mobile provider.

The search giant already makes the most-used mobile software on the planet, it designs and sells phones online, and it has become an Internet service provider with its Google Fiber initiative. It even has its own VoIP phone service called Google Voice, which allows people to get a Google phone number and call people through Gmail or Hangouts over Wi-Fi.

The missing link has been the cell towers needed to build out a nationwide network.

Rather than spending the tens of billions of dollars it would cost to create a wireless network, Google reportedly will carry its service over Sprint (S) and T-Mobile’s (TMUS) networks. Google declined to comment.

Google is expected to pay those carriers just $2 per gigabyte, according to Macquarie Securities analyst Kevin Smithen. That means Google could choose to provide super-cheap service that gives Verizon (VZ, Tech30) and AT&T (T, Tech30) something to worry about.

Adding Google to an already competitive field that is in the middle of a major price war isn’t likely to make the big carriers very happy — that’s why smaller carriers Sprint and T-Mobile are helping Google.

But T-Mobile and Sprint, in particular, are being cautious about the deal. Sprint worked a usage cap into its contract with Google that would allow the wireless company to renegotiate its deal if Google signs up a ton of customers, according to the Wall Street Journal.

That could happen. In 2018, Smithen believes Google will pay Sprint $750 million and T-Mobile $250 million for its service. That means even if Google chooses to break even, it could sell $1 billion in wireless services just three years from now.

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