Approximately one year ago, we discussed an idea of how Netflix and Google could alter the US Wireless landscape that’s dominated by Verizon and AT&T. In the last couple of days, that idea has come to fruition, courtesy of Google. It was just announced that Google made a deal with Sprint and T-Mobile to sell wireless services directly to last mile consumers. Looking at this specific news in a vacuum, doesn’t really show the impact of the move, because it’s only one small piece of the larger puzzle.
Now we are going to put together the different pieces, and draw a complete picture to illustrate the significant impact of Google’s bold move to challenge the WAN and Wireless incumbents. As of today, one of main challenges Google faces is that it doesn’t control content delivery in the last mile and wireless last mile. As Netflix discovered, last mile control is everything in the content business. When we look at the investments that Google has made over the years, its clearly obvious that it wants to disrupt Verizon, AT&T, Comcast, Time Warner, and so on. Why? Because they are the bottleneck to a much faster Internet. Should these incumbents be worried? WhatsApp decimated the texting business for wireless operators, costing carriers $33B in lost revenue. Google is going to take this approach further, and eliminate the last mile bottleneck.
- Google makes a deal with Sprint and T-Mobile to sell wireless services
- Google invested in SpaceX, along with other partners to the tune of $1B
- Google Fiber is expanding its footprint across the country, and challenging incumbent Cable Operators
- Wi-Fi 802.11AC Wave 2 is coming out soon and it’s going to boost wireless connectivity to 7Gbps, leapfrogging over wired network speeds
This is what we get when we add everything up.
However, there is one missing piece. Since Google Fiber is going to take ages to roll out nationwide, it needs an alternative plan to penetrate the last mile consumer market in a more immediate time frame. Google, say hello to Starbucks, and Starbucks say hello to Google. Starbucks is the missing piece to Google’s great ambitions of having some control of the last mile. Google rolling out copper or fiber to tens of millions of homes isn’t happening, so the next logical choice is to partner with a retailer that is present in all major US cities. Starbucks has 21,000+ stores in 65 countries. Continued in next post.