Google MVNO to launch this week – report

US search giant Google could launch its long anticipated MVNO as early as today, according to a WSJ report. An additional detail teased in the report is that Google is expected to offer data on a pay-as-you-go basis, with subscribers only paying for the amount of data they use.

There is no apparent change to the use of Sprint and T-Mobile networks, with dynamic switching between the two for subscribers, presumably much in the way EE did with the Orange and T-Mobile networks. There is also expected to be extensive use of wifi networks, including voice over wifi, and the service will initially be limited to Nexus 6 users.

The move to PAYG data is likely to be quite disruptive as there is currently good money to be made from subscribers not using all the data they have paid for in their postpaid bundles. The US mobile market is dominated by contact bundles, with 86% of all subscribers postpaid, according to Ovum’s WCIS service.

While the scope of Google’s MVNO is likely to be small at first, Verizon and AT&T will be very wary of its effect on customer expectations of value for money on data. The mobile market has been moving towards greater transparency when it comes to the cost of mobile services and consumers are increasingly reluctant to pay for more than they need. Traditionally they have been persuaded to buy expensive bundles by the lure of subsidised handsets, but this model too is under threat.

“Even if the scale of Google’s wireless play will be limited to begin with, its impact should not be underestimated,” said Dave Fraser, CEO of wifi aggregator DeviceScape. “By moving users between two cellular networks as well as wifi to ensure the best available experience, Google will truly be embracing a ‘connectivity first’ approach to wireless service.

“Incumbent mobile operators must respond by delivering a comparable service, one that ensures their customers are given automated connectivity tailored to their immediate circumstances. A service that combines cellular with all forms of wifi and manages the entire experience for quality can be greater than the sum of its parts, and demand for such a service is growing with every disruptive innovation that comes to market.”

What is less clear is Google’s business model for getting into the CSP game. Google’s core model has been to give stuff away (such as search, maps, Android, etc) in order to then make money from the users, either by advertising or by indirectly exploiting the captive market. Users of Google fixed and mobile services are likely to be steered towards other Google products and the MVNO could be mainly a sweetener for its fibre service, which in turn is probably a cornerstone of Google’s digital home strategy.