Why Fi?

Will iPhone Save Google's Mobile Virtual Network Operator?

Among its many business units, Google has a mobile virtual network operator business in the US, buying wholesale wireless capacity from Sprint, T-Mobile, and US Cellular. The service uses Wi-Fi hot spots whenever possible, bringing down costs by exploiting wireless local area networks. Google designed it to deliver value for money and flexibility to consumers. Although it's a reasonably good deal, we believe that few consumers are aware of its existence.

The service was originally dubbed Project Fi but, perhaps in an effort to make it sound less experimental, was recently rebranded as Google Fi. We note that Google made a similar move with Project Loon, now just called Loon, which uses air balloons to provide mobile coverage. Project Fi had several serious weaknesses.

One of these disadvantages was that only a limited number of devices could be provisioned to work with it, mainly smartphones in Google's direct sphere of influence such as Nexus and Pixel handsets. However, last week, in a bid to broaden its addressable market, Google announced an expansion of compatible smartphones including most iPhone models. This probably won't have a strong immediate impact, but it's certainly a necessary step if Fi has any chance of building up its subscriber total. The move suggests that Fi is here for the long-haul and the inclusion of support for iPhones is notable given the popularity of Apple's devices in the US.

Despite having been introduced over three years ago, we believe that Google Fi is a small-scale virtual operator in the US. However, in fairness, Fi was an invite-only service when it launched in 2015 (see Google and Carphone Warehouse Unveil Innovative MVNOs). Google opened it up to the general public in early 2016.

Google Fi charges $20 per month for unlimited calls and text messages, and $10 per GB of data, with a ceiling fee of $60 for data. This means that subscribers who use 6GB of data or more pay $80 per month. It's also worth noting that online access is slowed when customers have used more than 15 GB in a month. Customers can add additional lines for $15 per month. For international travellers, Google Fi charges the same $10 per GB outside the US.

Google has placed itself in the unusual position of being a smartphone original equipment manufacturer, providing devices to carriers while running a service that competes with theirs. In the US, the company has exclusively provided its first three generations of Pixel smartphones to Verizon. This is expected to change in 2019.

Given its pay-as-you-go pricing model, Google Fi mainly competes with prepaid services including those from AT&T, Sprint, T-Mobile and Verizon. This must affect the chemistry of the relationship that Google's hardware unit has with the carriers. Google is supplier and rival.

To promote Fi, Google has been running several attractive deals including an offer of up to $799 in service credit when customers buy two Pixel 3 phones. Google needs to be competitive to win customers, particularly as AT&T's Cricket and T-Mobile's Metro services offer unlimited tariff plans. Google is also hamstrung by having no storefronts to sell its service and devices. By contrast, Cricket and Metro benefit from thousands of physical locations; AT&T, Boost Mobile, Sprint's Virgin Mobile unit, T-Mobile, TracFone and Verizon also boast a strong retail presence. These wireless service providers are also well-represented at national retailers such as Best Buy, Target and Walmart.

Google Fi continues to be a rather perplexing experiment from the search giant. Its revamp comes as cable providers Comcast and Charter move into the market for virtual operators, heightening competition. Our bet is that Google sees Fi as a channel to push its own-branded smartphones, and that if it can encourage carriers to improve connectivity and Internet access, it will gain through greater usage of its own services.

This entry was posted on December 5th, 2018 and is filed under Services. You can follow any responses to this entry through the RSS 2.0 feed or you can leave a response.

Posted By Raghu Gopal On December 5th, 2018

(There are no comments yet)
Leave a Comment

Hot News

Team Tweets

CCS Insight
Omron's HeartGuide is the latest device to blur the line between wearables and healthcare devices:… https://t.co/3LWlGszMUL
Follow CCS Insight
Shaun Collins
RT @MarinaKoytcheva: Worth watching this session on the outlook for the digital economy at #WEF19 It may not be a humble thing to say, but…
Follow Shaun
Ben Wood
Anyone aware of any stats from insurance companies (or elsewhere) on the incidence and cost of damage caused by wat… https://t.co/oSHDofLM3q
Follow Ben
Martin Garner
Very useful briefing just now from brett Francis @AWS on the #IoT announcements from @AWSreInvent . Good to see how… https://t.co/WoG7cFA84J
Follow Martin
Geoff Blaber
The only thing more incredible than the 10,000 employees Amazon has dedicated to Alexa is the speed at which it’s g… https://t.co/01bxzJ4w2m
Follow Geoff
Marina Koytcheva
Worth watching this session on the outlook for the digital economy at #WEF19 It may not be a humble thing to say, b… https://t.co/qp2ZSaKDuP
Follow Marina
Nicholas McQuire
Major steps in the vital march towards #mobileEdge & #CloudComputing. An important partnership from #IBM &… https://t.co/UzmddHXwSG
Follow Nicholas
Kester Mann
RT @MarinaKoytcheva: Worth watching this session on the outlook for the digital economy at #WEF19 It may not be a humble thing to say, but…
Follow Kester
Angela Ashenden
.@slackhq has a new Chief Product Officer, Tamar Yehoshua (ex-Google) to go with its new logo: “A heartfelt thank y… https://t.co/gQVxmYpqTZ
Follow Angela
George Jijiashvili
@StewartMitchell Sure - feel free to DM me if easier.
Follow George
Katie Taylor
The lifesaving food 90% aren’t eating enough of: how more fibre could prevent disease-related deaths https://t.co/N1P9QfNBr8
Follow Katie

Recent Blog Posts

Blog Post
The Right Cuff Omron's HeartGuide Tries to Steal a March on the Apple Watch... Read more
Blog Post
Microsoft Links Up with Walgreens Changes Loom over US Healthcare Market Last Tuesday, Micros... Read more
Blog Post
Fossil and Google Sign Licensing Deal Fossil to License "Advanced" Smartwatch Tech to Google Goog... Read more
More blog

Latest Company News

Blog Post
Virtual Reality Device Market Declines in 2018 But Outlook Remains Positive Research firm CCS Insight forecasts 8 million virtual realit... Read more
More news