During my time working at a telco I learnt a great saying;
“If you want to become a millionaire, buy into telecommunications - Just make sure you’re a billionaire to start with”.
Being a telco is tough. I know many of you are probably thinking Boo bloody hoo, but consider this;
Cut throat competition erodes profit margins down to a blunt nub. Then there's the spectre of disruptive technologies which stand to destroy a chunk of a telco’s business. Disruptive tech is never far away when it comes to telecommunications.
Google have long championed disruptive market plays. Much to the delight of US broadband users Google have already forced US ISPs to up their game thanks to Google Fibre.
Now Google are at it again. This time with a mobile offering they’re calling Google Fi.
Perhaps the most hyped aspect of Google Fi has been the fact that it uses of several mobile Networks.
Instead of just using wholesaled access to a single mobile network, Google Fi uses the networks of Sprint and T-Mobile.
Google Fi combines them into a single virtual mobile network. When you whip out a Google Fi device to make a call, send a text or go online, it’ll use whichever network has the best reception.
This is good news for us as Google Fi should translate into improved coverage and network reliability. The strengths of one operators network makes up for the deficiencies of the other operator’s network. If one network falls over you still have the other network. Coverage blackspots could soon vanish too.
The other big feature of Google Fi is Wi-Fi calling with no special apps or services needed. Everything needed is integrated into Google Fi compatible devices.
In practice this means that when making a call using a Wi-Fi network, the only cost to is going to be broadband data and applicable toll rates.
This is not only likely to reduce arguments over phone bills but could also see naked broadband gaining in popularity.
More affordable broadband and mobile calling from home are big pluses for us. For Telco’s with a huge investment in land-line phones, the news isn’t so great.
Google Fi is also good news for travellers. International roaming has long been an exercise in fiscal pain. But with Google Fi, 120 countries will supply data at no extra (even if only using slower 3G rather than 4G) charges to Google FI users.
Voice calls cost a reasonable US $0.20 per minute, which is likely to be far cheaper than the current mobile roaming charges. With roaming being a key earner for Telco’s and a pain point for mobile users, the news is again not so good for Telco’s even though users stand to benefit.
Google Fi users are also credited for data they don’t use. If a Google Fi user buys 2GB of data for US$20 but only uses 1.35GB, they get the difference (US$6.50) credited back to their phone account. This is likely to be a big draw card for mobile users.
While 2degrees offers carryover data, other Telco’s could soon find them forced to upgrade creaky and inflexible billing systems to match Google Fi.
So is Google Fi anything new? In the New Zealand context the answer is a definite yes. In the US however Google FI isn’t quite so new. One of the cornerstone features of Google Fi, Wi-Fi calling, has been on offer in the US for some time. Both T-Mobile and Republic Wireless have offered it with selected smartphones for some time.
Reasonable International Roaming Data rates have been on offer by T-Mobile in the US for some time, while cheap international roaming costs have long been available in most countries via a host of International roaming SIM operators selling SIMs to travellers.
If Google Fi sounds great, the million dollar question is “how do I get it?” Sadly Google say that for now, Google Fi will remain a US only offering. Those lucky yanks will need an invitation in order to get their hands on Google FI.
At the time of their announcement, wannabe Google Fi users could also only use the Nexus 6 "phablet" on Google Fi. This limitation is likely to disappear as Google are likely to be pretty keen to broaden android support for Google Fi.
Either way, the writing is on the wall for Kiwi mobile Telco’s. While mobile plans have become more affordable, Google Fi could still spark huge competition should it launch in NZ.