
Why Google should just shut up and buy T-Mobile - esolyt
http://www.extremetech.com/mobile/142205-why-google-should-just-shut-up-and-buy-t-mobile
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mdasen
Everyone seems to want Google to enter the mobile space. However, I don't
think Google buying T-Mobile would work out so well.

T-Mobile has no low-frequency spectrum. Lower frequency spectrum allows
signals to travel further (in real-world conditions) and offers better in-
building coverage. AT&T and Verizon have most of the sub-1GHz spectrum in many
markets with Sprint trying to re-farm the ~14MHz they acquired via Nextel. A
Google-owned T-Mobile wouldn't be pushing the envelope on coverage and that's
something that the majority of Americans seem to find quite important (even if
they don't venture out of their home location much).

T-Mobile is the furthest behind in the path to LTE. Part of this is due to
T-Mobile needing to move technologies to different radio bands. T-Mobile
(historically) ran GSM at 1900MHz and deployed UMTS at 1700MHz. They are now
trying to re-allocate that so that they can run UMTS at 1900MHz (a
technology/frequency combination compatible with the iPhone) and LTE at
1700MHz (also compatible with the iPhone). AT&T, Verizon, and Sprint all have
unused spectrum for their initial LTE deployments. Even if Google were so
inclined, it takes time to re-do a lot of these decisions and for customers to
be appropriately equipped to move on to further plans.

Then the question comes up: how would Google improve T-Mobile or wireless in
general? T-Mobile's coverage likely wouldn't see dramatic expansion via Google
ownership. Google would probably push an aggressive LTE rollout, but certainly
not faster than Verizon. Unlike wired connections, wireless carriers have
pushed out the latest technologies (or will within 5ish years of those
technologies becoming available). We know that we can get 100Mbps to the home
over DOCSIS (cable) and ADSL in many countries is much more advanced. Wireless
isn't. In fact, LTE is probably more advanced in the US than anywhere else
(due mostly to Verizon, but others are similarly pushing). Google couldn't
really offer greater than LTE speed. Google would probably want to offer an
unlimited connection. That would be quite welcome, but I wonder if they might
bump up against capacity and capital constraints on this one. If Google Mobile
became as popular as AT&T or Verizon, that Google Mobile would have
considerably less spectrum (as T-Mobile has considerably less). One can
improve capacity by adding cell sites, but many jurisdictions make that very
difficult to accomplish. If it's less popular, are the revenues there to
invest so much in the network?

In terms of financials, Sprint has been losing money for 7 years (expecting to
start turning a profit in 2014) and T-Mobile seems to be going the red-ink
route as well. We coalesced (as a society) around two carriers and that's
unfortunate. Google doesn't just take on projects and subsidize them forever.
In fact, they do cancel many things. I don't think we would expect Google to
spend excessively on subsidizing wireless for consumers.

Speaking of finances, T-Mobile would probably want a price above $30B. AT&T
offered $39B and T-Mobile has more assets today (in the form of wireless
spectrum) due to AT&T's breakup fee. That's a lot of money to put toward this
project. I think a lot of us would like better competition in wireless and for
wireless to be better in general. However, without some sort of plan for what
Google could bring (beyond an all-Android phone lineup of Google-approved
devices), it doesn't seem (to me) that it would create something great. It
would greatly eclipse Google's next largest purchase (Motorola Mobility). With
Motorola, Google was getting an Android manufacturer and a patent portfolio.
It was strategic and Google clearly has ideas about how handsets should be
made. Do they have similar ideas on how a carrier should be run?

Finally, the thesis behind the article is that Google wants to push Android
forward. However, I question that. Sure, Google came out with the Nexus 4 at
$300, but it doesn't seem like they're pushing too hard to make sure supplies
are available. In some ways, it feels like they're trying to egg the industry
along, but don't want to do it themselves. In a lot of ways, it's more fun
being the person outside the tent yelling at the people inside it. If you can
produce a proof of concept about how you can do better than them (without
having to bring it to the same scale), all the better.

That isn't a criticism of Google or anyone in general. We need people like
that. It's merely to point out that something like Google Fiber (or possibly
the Nexus 4) isn't the same as becoming a utility company. Google was offered
rates below what the cities charge competitors (telco and cable companies) for
using utility poles. Google didn't have to spend time and money on things like
getting resistant cities to allow them in or deal with onerous requirements -
Google's proposition was "we'll pick whoever bends over backward the most for
us". Again, that isn't a criticism of Google, but merely to point out that
many cities and towns in my area denied Verizon the right to install FiOS for
reasons like not including enough public interest programming on their cable
lineup. Heck, in the cities that have Google Fiber, Google didn't even have to
commit to serving the whole city. Similarly, and this might be proven wrong in
the coming months, the Nexus 4 might not be something Google intends to be
mass-market, but more of an at-cost proof-of-concept. We'll see if it becomes
generally available selling millions in the coming months. We'll also see if
LTE becomes a part of the picture.

When purchasing a near-$40B wireless company, you have to really want to be in
wireless. You have to think you can make money out of it and you have to think
you can do something better than the current management. Maybe Google could do
better - I'm hoping that Google Fiber becomes a runaway success and profit
center for Google and expands across the country. Maybe Google's prowess
extends to utilities. It would be awesome. However, I think that Google
doesn't want to test that out whole-hog. I think they want to take baby steps.
They have Google Fiber for that purpose. They had Google Nexus devices before
buying Motorola. Maybe a Google MVNO (virtual network operator running off of
one of the national networks) first would let them test this.

~~~
stcredzero
_> A Google-owned T-Mobile wouldn't be pushing the envelope on coverage and
that's something that the majority of Americans seem to find quite important
(even if they don't venture out of their home location much)._

Even if they have to put up with contracts and sucky customer service and
treatment by carriers.

Someone with a clue should buy a carrier and push the envelope on customer
service. My bandwidth is good enough enough of the time. The service and
treatment I get has always and still sucks.

~~~
pdenya
That someone isn't Google though. Google is bad enough at customer service
that they should aquire t-mobile just for the support department.

~~~
stephengillie
I think T-Mobile's customer service department would degrade if it were bought
by Google. I don't believe good customer service is part of Google's highly-
technical engineering culture, and I wouldn't expect a purchased customer
service department to be allowed to retain its culture. Even if it did, would
Google's executives give more attention and resources to that department than
their other customer service departments?

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rkaplan
Besides everything that has been already mentioned, there's another glaring
reason Google would be unwise to do this:

Antitrust.

Google is already being considered for an antitrust investigation by the DoJ.
This makes sense, given their dominance in search and the tremendous network
of complementary products in their massive ecosystem. (Note that I am not
asserting that it makes sense for the DoJ to take regulatory action against
Google -- merely that it is reasonable for them to take a closer look).

With a carrier on their hands, in addition to a device manufacturer
(Motorola), a dominant mobile OS, search, AdSense, Fiber, tons of spectrum,
YouTube, etc., it is unlikely they will be able to avoid antitrust regulation.

~~~
mbreese
Google would get no anti-trust scrutiny for this (not that I think it is a
good idea). Google doesn't have a monopoly on smart phones, so there really
isn't a reason why the DoJ would really look at Google buying the number 4
carrier. Even if you note there were a mobile OS manufacturer, that owned a
handset maker, they aren't overwhelmingly dominant in any of those areas. So,
realistically, they wouldn't be able to use their dominance in search against
any existing player in mobile.

I think the biggest reason to not do it is $30B. :)

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sek
Google doesn't operate this way, this article has no real basis. 30 Billion
for being better at retail?

Maybe they could take a mayor shareholder stake for influence, but Motorola is
still separate and was bought for the patents.

Google will far more likely create it's own carrier.

~~~
pulledpork
I concur. Why not spend money disrupting the industry with a decentralized
service or similar instead of buying an existing player with all their
baggage?

Their fibre push seems to be much more the style I would expect.

~~~
Corrado
Well, there is a very real problem with putting cell towers on the ground.
T-Mobile has that, as well as spectrum, to offer a potential buyer. And those
two things are extraordinarily difficult to build out yourself.

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tadfisher
Conveniently left out is any analysis whatsoever on Google's bottom line. If
Google pays $30+ billion for a losing company, they will be in the red for a
long time until they turn things around, assuming that's possible (and they
can get the spectrum).

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yareally
I'm not sure Google would be interested in T-Mobile when they already
partnered with Dish Network to create a Cellular Network sometime next year
[http://9to5google.com/2012/11/16/google-dish-wireless-
servic...](http://9to5google.com/2012/11/16/google-dish-wireless-service-is-a-
go-plans-for-2013-launch-being-hatched/)

~~~
hayksaakian
I'm surprised no one else mentioned this, I was about to before I saw this
comment.

Google + T-Mobile + dish spectrum ?= awesome

~~~
raldi
The _article_ mentioned this.

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EwanToo
Why would Google want to buy a smallish network operator that only operates in
one country, and unsuccessfully at that?

There's an ongoing trend on tech blogs when talking about mobile, they think
that what happens in the USA is the only thing that matters (see a million
posts about $100 smart phones with $2000 contracts attached). In this case,
the blogger don't even seem to know the difference between T-Mobile (with 14
subsidiary networks) and T-Mobile USA, or at least never distinguishes between
the 2.

If Google wants to be in the mobile network business, and that's a big if,
it'll want to be in the mobile network business worldwide. Look at any one of
the biggest mobile network operators [1], Google will be far more interested
in them than a standalone T-Mobile USA.

1 -
[http://en.wikipedia.org/wiki/List_of_mobile_network_operator...](http://en.wikipedia.org/wiki/List_of_mobile_network_operators)

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davidfischer
While I can't completely rule it out since I have no inside knowledge, this
sounds like a terrible move. T-Mobile is in a commodity business and they
aren't particularly successful at it. While the author tries to make the
argument that Google needs retail help (recency bias, methinks), Google could
put together a vastly better retail experience for far cheaper than it would
take to buy T-Mobile. Unlike Moto, I don't think T-Mobile has any significant
IP. Lastly, I don't think Verizon, Sprint and AT&T would be thrilled to now be
in direct competition with their largest smartphone OS vendor?

~~~
apendleton
Not disagreeing otherwise, but to your last point, a similar argument could
have been made about smartphone manufacturers before they bought Motorola, and
yet they did it anyway, and it hasn't stopped other companies from continuing
to manufacture Android phones.

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josteink
How would this benefit the majority of Google's customers, most residing
outside the US?

This would be a complete waste of money which could be invested much, much
better.

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DigitalSea
It would be in Google's best interests to acquire multiple Amazon like
entities innovating in this space rather than spending $30 billion on one
company just so it can be better at retail wouldn't it? Retail is messy
business, I don't think it would be a good idea for Google to go down that
route. Give it time, they're a big company with the funds to work this problem
out themselves.

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joonix
Writer ignores the brand risk to Google by getting involved in a business like
this. Consumer facing mobile is a messy business, as is retail. You've always
got a ton of pissed off customers mad about something, and it could do a lot
of damage to a strong brand like Google.

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jezfromfuture
The top comment here is misguided at best TMobile in the uk is actually the
only company that current has an LTE network. And one of the most innovative ,
TMobile USA seems to be a total joke of a company that just shares the name.

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wei2012
Apple used tomtom's map, now what? Please, it's not that naive.

