What happens when Google buys Sprint too?

@ChunkaMui just put up a great post in Forbes: Motorola + Sprint = Google’s AT&T, Verizon and Comcast Killer.

Easy to imagine. Now that Google has “gone hardware” and “gone vertical” with the Motorola deal, why not do the same in the mobile operator space? It makes sense.

According to Chunka, this new deal, and the apps on it,

…would destroy the fiction that internet, cellular and cable TV are separate, overlapping industries. In reality, they are now all just applications riding on top of the same platform. It is just that innovation has been slowed because two slices of those applications, phone and TV, are controlled by aging oligopolies.

AT&T and Verizon survive on the fiction that mobile text and voice are not just another form of data, and customers are charged separately (and exorbitantly) for them. They are also constraining mobile data bandwidth and usage, both to charge more and to manage the demand that their aging networks cannot handle.

Comcast, Time Warner Cable and other cable operators still profit from the fact that consumers have to purchase an entire programming package in order to get a few particular slices of content. This stems from the time when cable companies had a distribution oligopoly, and used that advantageous position to require expensive programming bundles. Computers, phones and tablets, of course, are now just alternative TV screens, and the Internet is an alternative distribution mechanism. It is just a matter of time before competitors unbundle content, and offer movies, sports, news and other forms of video entertainment to consumers.

The limiting factor to change has not been the technology but obsolete business models and the lack of competition.

Before Apple and Google came in, the mobile phone business was evolving at a geological pace. I remember sitting in a room, many years back, with Nokia honchos and a bunch of Internet entrepreneurs who had just vetted a bunch of out-there ideas. One of the top Nokia guys threw a wet blanket over the whole meeting when he explained that he knew exactly what new features would be rolled out on new phones going forward two and three years out, and that these had been worked out carefully between Nokia and its “partners” in the mobile operator business. It was like getting briefed on agreements between the Medici Bank and the Vatican in 1450.

Apple blasted through that old market like a volcano, building a big, vertical, open (just enough to invite half a billion apps) market silo that (together with app developers) completely re-defined what a smartphone — and any other handheld device — can do.

But Apple’s space was still a silo, and that was a problem Google wanted to solve as well. So Google went horizontal with Android, making it possible for any hardware maker to build anything on a whole new (mostly) open mobile operating system. As Cory Doctorow put it in this Guardian piece, Android could fail better, and in more ways, than Apple’s iOS.

But the result for Google was the same problem that Linux had with mobile before Android came along: the market plethorized. There were too many different Android hardware targets. While Android still attracted many developers, it also made them address many differences between phones by Samsung, Motorola, HTC and so on. As Henry Blodget put it here,

Android’s biggest weakness thus far has been its fragmentation: The combination of many different versions, plus many different customizations by different hardware providers, has rendered it a common platform in name only. To gain the full power of “ubiquity”–the strategy that Microsoft used to clobber Apple and everyone else in the PC era–Google needs to unify Android. And perhaps owning a hardware company is the only way to do that.

That’s in response to the question, “Is this an acknowledgment that, in smartphones, Apple’s integrated hardware-software solution is superior to the PC model of a common software platform crossing all hardware providers?” Even if it’s not (and I don’t think it is), Google is now in the integrated hardware-software mobile device business. And we can be sure that de-plethorizing Android is what Larry Page’s means when he talks about “supercharging” the Android ecosystem.

So let’s say the scenario that Chunka describes actually plays out — and then some. For example, what if Google buys,  builds or rents fat pipes out to Sprint cell sites, and either buys or builds its way into the content delivery network (CDN) business, competing with while also supplying Akamai, Limelight and Level3? Suddenly what used to be TV finishes moving “over the top” of cable and onto the Net. And that’s just one of many other huge possible effects.

What room will be left for WISPs, which may be the last fully independent players out there?

I don’t know the answers. I do know that just the thought of Google buying Sprint will fire up the lawyers and lobbyists for AT&T, Comcast and Verizon.

 

14 comments

  1. Bob Frankston’s avatar

    To really change the game, of course, Google needs to change the rules. Since it makes money using the network then it will do the most by liberating the bits from the path. If it does buy Sprint, it should make it infrastructure available to all. Same for its fiber in Kansas City.

    It shouldn’t have the full burden of funding it itself. It can use its clout to help cities convert to an infrastructure approach to fund the whole and create opportunity for all. That’s the approach I took for home networks — people fund their own connectivity within their homes — and it worked out very well.

  2. Doc Searls’s avatar

    Thanks, Bob. Great to have you weigh in here.

    Can you tell us what you mean by “an infrastructure approach?” (I know, but I doubt most readers do, yet.)

  3. Joe LoRe’s avatar

    Check out my comment in “Google to Acquire Motorola’s handset business for $12.5 Billion” http://fyre.it/tZG

  4. Brett Glass’s avatar

    Mr. Frankston will support any entity, no matter how evil (and this includes Google), which might further his monomaniacal goal of destroying all providers of communications. He seems to have a special hatred of ISPs.

  5. Russ Nelson’s avatar

    You’re so cute, Brett, when you’re arguing in favor of your wallet.

  6. Johannes Ernst’s avatar

    Jean-Louis Gassee, formerly Apple exec, has been calling for Apple to buy a carrier. http://www.mondaynote.com/2011/08/14/steve-please-buy-us-a-carrier/

    I think it’s just a matter of time until that kind of thing happens, although there are many practical difficulties (e.g. carriers are mostly regional beasts/the tech market is global, low-margin/high-capex business etc.)

    If this happened, you know that Google and others (Facebook, Microsoft, perhaps others) would do the same, and the world would indeed be a different place.

  7. Brett Glass’s avatar

    You’re so charming, Russ, when you spout ignorant nonsense.

  8. Doc Searls’s avatar

    Apple certainly has the cash to buy a carrier. It just doesn’t have the nature otherwise. Steve is an art guy, a high-margin guy and a minimized SKU guy. He can change a whole business with one SKU (as he did with the iPod, the iPad and the iPhone), and with relatively little hassle.

    Going into the carrier business is like walking into a Shakespearean tragedy, without the poetry. It’s all warring countries and city-states, with rules too complex to describe, palace intrigue, double-dealing and back-stabbing. I just wish Hunter S. Thompson were alive to describe it properly. I can’t see Apple doing that, but I can see Google, mostly because they’re already involved and they have to, especially now in the Googlerola era, which started Monday.

  9. Johannes Ernst’s avatar

    Following your argument, if Google does indeed buy a carrier, won’t Apple necessarily follow? (the counter-argument being that they will have years or work cut out for them to just make the Motorola integration work)

  10. Doc Searls’s avatar

    I don’t think either Google or Apple want to compete straight up with each other. Google needed Motorola for the patents (clearly) and to bring some consistency to the Android hardware market (probably). Not because it wanted to take Apple on directly. And Apple doesn’t do anything, ever, that it can’t control and make big profits with. So I don’t see it happening.

    Actually, I don’t see Google buying Sprint, really. Or Apple buying T-Mobile, as is now being suggested by some.

    But then if you’d asked me last week if HP would put its biggest division up for sale, I would have said “You’re kidding.” But they did, so I wondered out loud if Google would be up for buying them too. I don’t really expect that, either.

  11. Jeremy’s avatar

    Doc, do you think it is a coincidence that Google chose Kansas City (KS and MO) for their new fiber network, just a few short miles away from Sprint Headquarters in Overland Park, KS?

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