Five Reasons Wireless Providers Should Fear Google

When Google chief executive Eric Schmidt took the stage at Mobile World Congress, it seemed that many of his remarks were meant to placate the mobile phone industry. And for good reason: Over the last year, Google has become a mobile powerhouse — this was Schmidt’s first keynote in Barcelona, after all – that, in many ways, competes with wireless service providers. The past year has seen a proliferation of Android phones and the debut of powerful mobile apps such as Google Voice and Maps Navigation. It’s a good thing in that Google’s driving sales, but it’s also a cause for concern. Here are five reasons mobile telcos should be worried about Google:

Google Voice, Maker of Dumb Pipes

Google Voice replaces all the basic services a wireless carrier provides, except for the actual data and voice. Google controls your phone number — often used by carriers as a bargaining chip when you want to terminate a contract early — manages voicemail, sends free text messages, and sets its own rates on international calls. So much for being bound to the ways of AT&T or Verizon Wireless.

Broadband Builder

As Google experiments with Gigabit-per-second broadband in a handful of cities, the company assured mobile service providers that it has no plans to compete with them. This is from the company that bid, albeit unsuccessfully, for wireless spectrum two years ago. If I were a telecom, I wouldn’t buy Google’s assurances.

Cell Phone Seller

With the Nexus One, Google decided not to sell the phone through T-Mobile’s physical storefronts, instead offering it directly through Google’s own Web site. This allows Google to sell both subsidized and unsubsidized phones. The strategy hasn’t paid off yet, and I have a feeling telcos are hoping it never does.

Purveyor of Premium Services, For Free

Beyond voice, text, and data plans, wireless providers sell extra services for a monthly charge, such as GPS navigation or AT&T’s FamilyMap, which helps parents keep tabs on their children. But those paid features aren’t necessary when you have an Android phone with Google Maps Navigation and Latitude, offered for free.

Mobile Ad Dominance

So, if you’re a wireless service provider, and Google’s taking control of so many ways you used to make money, maybe you can turn to advertising, right? The only problem is, Google’s got a tight grip on that, too. Today, Vodaphone chief executive Vittorio Colao threw the “M” word around, saying Google’s too powerful in the mobile ad space, and needs government scrutiny. Schmidt’s response? “As long as we’re pro-consumer we’ll be fine.”