Google announces Project Fi: Partners with Sprint and T-Mobile for Network Access (previous title: Google to start it's own Wireless Service; using T-Mobile/Sprint for it's Network Footprint.)

[travismheim]

If Google were to acquire Sprint somehow and go Android-only, I'd leave the service.

Is that even possible with agreements Sprint currently has with Apple? I don't see it ever happening.

[jroepcke51]

If Google were to acquire Sprint somehow and go Android-only, I'd leave the service.

Even though Google is in a fight with Apple, why would they alienate a good portion of ad data collection?

[sbolen]

Even though Google is in a fight with Apple, why would they alienate a good portion of ad data collection?

I don't think it's so much a fight, per se, but more of a symbiotic relationship. As long as Apple keeps using Google as the default search engine, everything's gravy, baby.

[Paynefanbro]

If Google were to acquire Sprint somehow and go Android-only, I'd leave the service.

You don't need to tell us that. Looking at your phones/devices alone tells the whole story.

[sbolen]

You dint need to tell is that. Looking at your phones/devices alone tells the whole story.

I really like Google's Material Design, but I make a living designing apps for iOS. So my decision is as much preference as it is putting food on the table.

[caspar347]

I haven't read into either project much, but to me it looks like Google is trying to push the industries holding it back into a competitive, cheaper state with both this and Google Fiber.

 

Think about it. People will be able to use more Google "stuff" if they have faster home broadband and more/cheaper mobile data.

[lou99/maximus1987]

I haven't read into either project much, but to me it looks like Google is trying to push the industries holding it back into a competitive, cheaper state with both this and Google Fiber.

 

Think about it. People will be able to use more Google "stuff" if they have faster home broadband and more/cheaper mobile data.

Googles stuff doesn't take much capacity.

[caspar347]

Googles stuff doesn't take much capacity.

True for most of it, but they do run YouTube and Google Play Movies and TV. And who knows, maybe they want to move into other high-capacity product categories.

 

And regardless, cheaper service will encourage more use of said service.

 

It seems to be working too. In many places all they've done so far is run "fiber to the press release" and AT&T is already working on/offering cheaper broadband or Gigapower.

[sbolen]

Googles stuff doesn't take much capacity.

Sure, on Google properties. But they own ad networks, which is a huge cash cow.

[NateC]

CNN Money is reporting that Google is expected to pay Sprint and T-Mobile $2 per gigabyte:

 

http://money.cnn.com/2015/01/23/technology/mobile/google-wireless/

 

This sounds like a cheap rate to me.  Not sure what the "fixed" costs per line would be (if any).  I wonder what Republic Wireless and Ting pay.

[NateC]

And I think there's very little chance that Google would go Android-only.  They are not stupid enough to shun 40% of the US marketshare.  They also support IOS for several mobile apps already.  There may be aspects of the service that are better with an Android device simply because Google is able to integrate functionality into it more easily.  The only reason I could see them restricting the service to Android devices is if they absolutely had to due to technical reasons (e.g., core OS changes required that Apple refuses to cooperate with).

[gnoj]

CNN Money is reporting that Google is expected to pay Sprint and T-Mobile $2 per gigabyte:

 

http://money.cnn.com/2015/01/23/technology/mobile/google-wireless/

 

This sounds like a cheap rate to me. Not sure what the "fixed" costs per line would be (if any). I wonder what Republic Wireless and Ting pay.

From what I can tell, the wholesale rates an MVNO pays are unfortunately, just like roaming rates, usually a closely guarded secret.

 

Ting's pricing model, which offers per-unit billing beyond a certain point, does at least give us some clue about their wholesale rate, which is not an option with most other MVNOs, since their plans typically include some degree of "unlimited" for minutes and/or data.

 

For data beyond 2GB, they charge $0.015/MB, which comes to $15.36/GB. You then have to take a guess at what portion of their op-ex + profits are derived from the data usage revenue and subtract that. I take them at their word that they only take a "fair margin" on service (~20%), so my estimate has been that they pay in the neighborhood of $10-12/GB, which will be the same for their T-Mobile-based service as well.

 

If Google is really only going to be paying $2/GB, and their plan is to operate at or near break-even with the aim of using it to promote their other services (and/or couple it with a low ($15 or less) base rate, since they wouldn't need to be as concerned about propping up ARPU as the network provides are), then I'd be very excited to see what service plans they come up with.

 

I wouldn't even mind the option of dealing with DPI on select lower-cost plans that is used, for example, to track what ads people click on, since I'm often on a VPN anyway.

[centermedic]

to the above post ^ WALL OF TEXT! i only grazed over a little of what that guy wrote but i did see something about google buying sprint. the only thing i halfto say to that is LOL never. dont even consider it. softbank will never sell so just give up that dream. Nor will they buy T-Mobile. 

 

They have their fiber network to worry about right now and are smart enough to not just spend stupid amounts of money all at once.

Never say never. I agree that it is unlikely but I would not say impossible.

[maxsilver]

From what I can tell, the wholesale rates an MVNO pays are unfortunately, just like roaming rates, usually a closely guarded secret.

 

Ting's pricing model does at least give us some clue about their wholesale rate

 

For data beyond 2GB, they charge $0.015/MB, which comes to $15.36/GB. You then have to take a guess at what portion of their op-ex + profits are derived from the data usage revenue and subtract that. I take them at their word that they only take a "fair margin" on service (~20%), so my estimate has been that they pay in the neighborhood of $10-12/GB, which will be the same for their T-Mobile-based service as well.

 

Ting almost certainly pays less than $12 per gigabyte. (My guess is around $7/gb) What Ting charges has very little to do with what they pay.

 

Google's $2/GB is very low, but not ridiculously low. Most group's specific agreements are under strict NDA's, so I can't *prove* this with a source, but it's not uncommon for MVNO's to pay $4-$8 per gigabyte depending on their size / scale / negotiated agreement / etc. (and those prices are from 2013 -- I have to assume they've dropped some since then)

 

Prices also drop if you buy in bulk, and pre-purchase ahead of time. (Which most MVNO's can't afford to do, but Google presumably could).

 

It's also typical for Sprint / the parent provider to only get 25-40% of the "sticker price" of any plan you see an MVNO offer https://gigaom.com/2012/06/25/why-are-mvnos-so-hot-right-now-thank-the-carriers/ 

(although this fluctuates depending on how much of the Sprint "platform" they choose to use alongside simply offering service. Sprint specifically has a product that's a "MVNO in a box" -- with literally everything done for the MVNO already -- that they typically charge extra for).

 

No consumer MVNO is paying $10-$15 per gigabyte unless they've made a huge mistake.

 

Some enterprise MVNO's for M2M are locked into agreements like that. But they typically sell $5-$20/month plans for industrial/commercial machines on tiny data allotments, which is significantly different. (Think data plans for semi truck GPS's, or plans for ATMs, plans for ZipCar/Car2Go trackers, remote weather monitoring stations, etc, where monthly usage is measured in the 5 to 90mb range)

[sdiamond85]

I do not see google going all android on the new service. I do think though this may be a marketing move toward customers that want more integration of google services. I see a native App for Iphone, and on the android side a total integration of voice, email, music, wallet, just everything. 

 

Google is going to stay agnostic concerning Iphone. Google wants all the traffic, and is less concerned what OS you are using.  I am not sure how they turn a profit if they are paying $2.00 a gig. I think with higher data of voice and data, the average customer will be using at least 10 gig a month

[JossMan]

Google will be one step closer to world domination now with its soon to be wireless offerings.

 

[NateC]

Ting almost certainly pays less than $12 per gigabyte. (My guess is around $7/gb) What Ting charges has very little to do with what they pay.

 

 

Hmm.  I'm not disputing your numbers since you seem to have some real information while I can only speculate.  But this would imply that Ting's mark-ups are beyond what I would consider "reasonable".  If they're paying $7/GB, it would imply around 119% margins on data!  I would have assumed something closer to the 20% that gnoj estimated.  But maybe 119% margins are actually "reasonable" in this industry relative to the others?  I don't know.

 

On the other hand, if we look at Republic Wireless's plans I can make some additional estimates:

•   $10/month: Talk/text on cell only (data on WiFi only)
•   $25/month: Talk/text + 5 GB of unthrottled 3G data and 25 MB of roaming data
•   $40/month: Talk/text + 5 GB of unthrottled 4G data and 25 MB roaming data

Republic Wireless has also stated that roaming data costs ~30x more than on-network data (https://community.republicwireless.com/blogs/republic/2014/09/10/an-update-to-our-data-roaming-policy)

 

Additionally, this article states that T-Mobile paid 30 cents per MB for data roaming in 2013: http://www.fiercewireless.com/story/study-t-mobile-paid-average-30-centsmb-us-data-roaming-costs-2013/2014-10-31

 

30 cents per MB would be an insanely high $307.20 / GB.  Assuming RW's roaming rates are similar to T-Mobile's, the RW's in-network data costs should be 1/30 of $307.20 / GB, or about $10 / GB.

 

Breaking down the $25/month 3G plan:

• Assume ~$10/month goes toward general overhead, WiFi calling, talk/text on cellular
• 25 MB of roaming data costs RW about $7.50 if the 30 cents per MB figure is accurate.  They probably subsidize this a bit because they know not all customers will use the full 25 MB each month.  Maybe $5/month goes toward roaming data on average.
• That leaves $10/month for the 5 GB of unthrottled 3G data and RW's profit.  If we conservatively say that only $2/month of that is RW's profit, that puts a ceiling of 3G data costs at $8 / 5 GB or $1.60 / GB.

Doing the same thing with their $40/month 4G data plan, RW would be left with $25/month for 4G data and profit.  Based on that it seems reasonable that 4G data costs RW between $4 and $6 / GB.

 

My conclusion?  Either Republic Wireless is getting a much better deal than Ting, or they're operating with razor thin margins comparatively.

[lou99/maximus1987]

Hmm. I'm not disputing your numbers since you seem to have some real information while I can only speculate. But this would imply that Ting's mark-ups are beyond what I would consider "reasonable". If they're paying $7/GB, it would imply around 119% margins on data! I would have assumed something closer to the 20% that gnoj estimated. But maybe 119% margins are actually "reasonable" in this industry relative to the others? I don't know.

 

On the other hand, if we look at Republic Wireless's plans I can make some additional estimates:

• $10/month: Talk/text on cell only (data on WiFi only)
• $25/month: Talk/text + 5 GB of unthrottled 3G data and 25 MB of roaming data
• $40/month: Talk/text + 5 GB of unthrottled 4G data and 25 MB roaming data

Republic Wireless has also stated that roaming data costs ~30x more than on-network data (https://community.republicwireless.com/blogs/republic/2014/09/10/an-update-to-our-data-roaming-policy)

 

Additionally, this article states that T-Mobile paid 30 cents per MB for data roaming in 2013: http://www.fiercewireless.com/story/study-t-mobile-paid-average-30-centsmb-us-data-roaming-costs-2013/2014-10-31

 

30 cents per MB would be an insanely high $307.20 / GB. Assuming RW's roaming rates are similar to T-Mobile's, the RW's in-network data costs should be 1/30 of $307.20 / GB, or about $10 / GB.

 

Breaking down the $25/month 3G plan:

• Assume ~$10/month goes toward general overhead, WiFi calling, talk/text on cellular
• 25 MB of roaming data costs RW about $7.50 if the 30 cents per MB figure is accurate. They probably subsidize this a bit because they know not all customers will use the full 25 MB each month. Maybe $5/month goes toward roaming data on average.
• That leaves $10/month for the 5 GB of unthrottled 3G data and RW's profit. If we conservatively say that only $2/month of that is RW's profit, that puts a ceiling of 3G data costs at $8 / 5 GB or $1.60 / GB.

Doing the same thing with their $40/month 4G data plan, RW would be left with $25/month for 4G data and profit. Based on that it seems reasonable that 4G data costs RW between $4 and $6 / GB.

 

My conclusion? Either Republic Wireless is getting a much better deal than Ting, or they're operating with razor thin margins comparatively.

Entry of google will most certainly force tings prices down.

[maxsilver]

Hmm.  I'm not disputing your numbers since you seem to have some real information while I can only speculate.  But this would imply that Ting's mark-ups are beyond what I would consider "reasonable".  If they're paying $7/GB, it would imply around 119% margins on data!  I would have assumed something closer to the 20% that gnoj estimated.  But maybe 119% margins are actually "reasonable" in this industry relative to the others?  I don't know.

 

 

It depends on how your calculating "margins".

 

Your "119%" number is probably accurate (in costs to Sprint) but appears to *only* count Ting's costs to Sprint. Typically, "margin" includes a lot of other non-Sprint costs. For instance, Ting has to handle device fulfillment orders. Ting incurs some costs in advertising / marketing / etc.

 

Ting also has the best-of-industry customer service (far better, in my opinion, than postpaid Sprint and T-Mobile, on both personal and business sides), which is particularly expensive. Ting also has the best website / online experience (in my opinion) which they developed with their own software team, which is another somewhat expensive endeavor. Ting's also pretty gracious on credits -- if a mistake was made, and you call them, they waive costs and fees pretty easily.

 

I suspect once you add those costs in, Ting's true margins drop from "119%" to roughly 40-70%, which is still very high, but not ridiculously unreasonable. This is just an assumption on my part though.

 

- - -

 

I do believe you are absolutely correct on your Ting vs Republic Wireless comparison. Ting happens to charge a very high premium for data (more than any other consumer MVNO I'm aware of).

 

For Republic Wireless, it wouldn't surprise me if most of their subscribers never hit the 5GB ceiling. Your numbers sound appropriate for a "worst case" scenario. But I bet a lot of their subs hover in the 1-3GB monthly data usage, which would bump their margins back up a bit on the non-maxed-out users. Especially since they reward subs for WiFi usage in a non-antagonistic way.

[maxsilver]

Breaking down the $25/month 3G plan:

• Assume ~$10/month goes toward general overhead, WiFi calling, talk/text on cellular
• 25 MB of roaming data costs RW about $7.50 if the 30 cents per MB figure is accurate.  They probably subsidize this a bit because they know not all customers will use the full 25 MB each month.  Maybe $5/month goes toward roaming data on average.
• That leaves $10/month for the 5 GB of unthrottled 3G data and RW's profit.  If we conservatively say that only $2/month of that is RW's profit, that puts a ceiling of 3G data costs at $8 / 5 GB or $1.60 / GB.

Doing the same thing with their $40/month 4G data plan, RW would be left with $25/month for 4G data and profit.  Based on that it seems reasonable that 4G data costs RW between $4 and $6 / GB.

 

Yeah, it wouldn't surprise me if RW pays approx $5/GB.

 

I suspect the 3G plan assumes the average user is using an average of 1GB cell data per month ($5ish in data costs)

and the 4G plan assumes the average user is using an average of 3GB cellular data a month ($15ish in data costs)

[IamMrFamous07]

I wonder will their be any network incentive to this deal. Expediting band 41 deployment?

 

Just curious

[lou99/maximus1987]

I wonder will their be any network incentive to this deal. Expediting band 41 deployment?

 

Just curious

Is the survival of itself not incentive enough?

[lou99/maximus1987]

http://www.fiercewireless.com/story/googles-mvno-would-reportedly-look-best-sprint-t-mobile-or-wi-fi-signal/2015-01-26?utm_source=Twitter&utm_medium=Editor&utm_campaign=SocialMedia

 

Google would search for best signal or wifi and possibly best real time prices

[Jones]

So a best of both worlds plus Wi-Fi?

That would create huge pressure on the duopoly but would also cannibalize Sprint and T-Mobile's customer base. I would think financially Sprint and T-mo would have to be well compensated for such a deal if it were to work as Google supposedly intends.

[lou99/maximus1987]

So a best of both worlds plus Wi-Fi?

That would create huge pressure on the duopoly but would also cannibalize Sprint and T-Mobile's customer base. I would think financially Sprint and T-mo would have to be well compensated for such a deal if it were to work as Google supposedly intends.

This also makes it unlikely that CDMA and umts would be both active as I don't think it's possible to switch between them often enough tabs quickly enough to not make it annoying.

 

Probably TMO's umts would always be used along with the lte of sprint or tmobile.

 

Is this possible?

 

Google is paying $2/gig. See articles above.