Could Google Phone Mark End of Network Domination

News "leaked" this weekend of an unlocked Google-branded phone. On the upside, an unlocked phone means you aren't tied to any particular carrier, nor are you required to sign a contract, but on the downside, you don't get the large provider subsidy on the phone cost in exchange for the contract lock-in. I'm wondering if Google releases a really nice unlocked phone for a reasonable price, if it could mark the beginning of the end of large network domination in the U.S.

The Rest of The World Doesn't Operate this Way

If you go to Europe, you'll find network stores similar to AT&T and Verizon, but you are hardly limited to these options as you are for the most part in the US. Instead, you can walk into just about any department store and find a variety of unlocked phones available for sale without restriction. There are plenty of reasonably-priced choices and when you walk out, you can go to one of the many kiosks that sell SIM cards, plug it into the phone and you're good to go. No contract, no hassles, no problem.

We Aren't Trained this Way

In the US we are trained to go to the phone store (or consumer electronics store of choice) and pick out a phone. We find the one we want. We sign a contract and the cheaper the phone, usually the greater the commitment. For instance, Radio Shack has a displayed price for AT&T phones, but a closer look reveals that the cheapest price requires that you renew your 2-year contract *and* add on at least one $9.99 or more feature to your bill. AT&T is still trying to get you to buy extra services and who can blame them? That's how they make a living.

Why Shouldn't The US Operate in an Open Market?

Why shouldn't we operate in an open cell phone service market in the US too. Sacha Segan writes in PC Magazine that the US market is complicated by a variety of infrastructure choices:

The U.S. uses two incompatible radio standards on three different spectrum bands. It's possible to build a GSM phone that supports T-Mobile and AT&T, sure. But folks who want Sprint and Verizon will still be out in the cold, because the network-based controls on those carriers can actually lock out unapproved phones.

I wish I knew more about the network end of things, but I'm not clear that Europe and the rest of the world operate on a single infrastructure style, and they seem to manage to work around this. What's more it seems to me, that they could release a variety of phones over time to accommodate these differences. Vendors would buy time from the various networks and sell SIM Cards based on network requirements. These companies could compete on price and service.

I think we can all agree, that for the most part, people are fed up with the major providers and are looking for alternatives. Could a phone with the clout of Google behind it, that provides a way to be free of these hated entities lead the way to a full-scale change in the way we purchase cell phone coverage in the US? There are too many unknown variables at this point, including cost and features on this phone, but if this comes to pass, we could remember this as a seminal moment in time, when the cell phone business in the US changed forever.

[calico]

Sorry but how exactly does an unlocked phone reduce the influence of the providers? they still own the 'pipe' and pay as you go is certainly not the cheap option. You can get a basic data plan but it's insultingly small and they penny anti you for all the other stuff just the same.
There is just no competition between the network providers anywhere.

[Techwriter10]

Hi Calico:
I'm thinking you will be able to buy disposable 30-day SIM cards from kiosks you'll find all over the place. They are very common in Europe. The SIM cards may come from the networks themselves, but my guess is that the networks will sell pools of bandwidth to different providers who will market their own cards. I expect the networks will also have to open their pipes to alternatives, just as the land lines have been forced to do. So one way or another, I think there will some sharing going on.

[dmclark]

Question please: How does one identify one's own phone number when using a 30-day SIMM card? How is that managed and controlled? Thanks very much.

[Abdelaziz]

>> how does one identify one's own phone number when using a 30-day SIMM card?

The SIM cards embed the phone number if I may say. If you buy a SIM card in the kiosk, it's deactivated by default. The IN (Intelligent Network) recognizes when a given SIM card goes online for the first time (needs the PIN to be entered) and activates the account (prepaid generally) etc. The IN then allocates a phone number that you check generally via a specific call number.

>> How is that managed and controlled?

The IN manages everything. INs are big server or server farms that, to my knowledge, manage the number, the accounts, their credits, etc. I don't believe postpaid numbers can be used that way since they need more personal data to be entered (for the prepaid SIM cards, it's looser depending on countries, but you have to prove at least your id, and it will be submitted later by the kiosk to the phone operator that will keep it in the IN system as well).

[Philippe Chabot]

Some comments from Europe (Netherlands):

1. No, mobile network providers don't *have* to open their pipes to others because there are enough compatitors (which is not the case with landlines, the 'last mile' to the homes).

2. Mobile network providers *do* sell airtime to others, so called MVNO's (Mobile Virtual Network Operators). But the providers also sell their own contracts.

3. Here you can buy a cheap phone in combination with a 1 or 2 year contract. Indeed you can buy an unlocked phone and then buy a prepaid SIM card or have a SIM-only contract. The latter is a post paid contract without phone; of course much cheaper than one with phone so you can calculate what your phone *really* costs. Stange enough people keep thinking they really get their phone cheap or for free. Don't know why...

4. A new prepaid SIM card will have a new number. At kiosks, shops, supermakets, etc. you can buy extra time. You get a form with a long (12 digit?) number. With your phone (with the prepaid SIM card) you call a free number and enter this long number. After that your balance is topped up again.

5. And in case your phone is still OK after a 1 or 2 year contract, you can sign a new contract with the same provider. But if you wish you can go to another provider and keep your number, porting it to the new provider. They have to cooperate with this by law and they do this really smoothly nowadays.

6. In Europe we only have two types of network: GSM and UMTS. Most modern phones work on both and most operators explore both. Since UMTS (= the newer one) doesn't have as much coverage as GSM, phones switch between the two types automatically. So whatever phone you have here, it will work throughout Europe (or will not work anywhere).

Hope this helps you guys a bit in your discussions and hope you will have open mobile networks soon like here in Europe.

Philippe Chabot

[Techwriter10]

Thanks for all the great information on this. These are fantastic comments and certainly are helping me fill in some of my information gaps about how all of this works.

Regards,
Ron

[Philippe Chabot]

Need more info about this subject? Let me know. I'm a telecom professional (consultant & project manager) here.

Philippe

[Techwriter10]

Thanks, Philippe. Maybe we can do a Q&A sometime on differences between US and Europe cell phone systems.

Ron

[Philippe Chabot]

Perfect idea. See your Inbox at Daniweb for contact info.

Philippe

[rich3800]

News "leaked" this weekend of an unlocked Google-branded phone. On the upside, an unlocked phone means you aren't tied to any particular carrier, nor are you required to sign a contract, but on the downside, you don't get the large provider subsidy on the phone cost in exchange for the contract lock-in. I'm wondering if Google releases a really nice unlocked phone for a reasonable price, if it could mark the beginning of the end of large network domination in the U.S.

The Rest of The World Doesn't Operate this Way

If you go to Europe, you'll find network stores similar to AT&T and Verizon, but you are hardly limited to these options as you are for the most part in the US. Instead, you can walk into just about any department store and find a variety of unlocked phones available for sale without restriction. There are plenty of reasonably-priced choices and when you walk out, you can go to one of the many kiosks that sell SIM cards, plug it into the phone and you're good to go. No contract, no hassles, no problem.

We Aren't Trained this Way

In the US we are trained to go to the phone store (or consumer electronics store of choice) and pick out a phone. We find the one we want. We sign a contract and the cheaper the phone, usually the greater the commitment. For instance, Radio Shack has a displayed price for AT&T phones, but a closer look reveals that the cheapest price requires that you renew your 2-year contract *and* add on at least one $9.99 or more feature to your bill. AT&T is still trying to get you to buy extra services and who can blame them? That's how they make a living.

Why Shouldn't The US Operate in an Open Market?

Why shouldn't we operate in an open cell phone service market in the US too. Sacha Segan writes in PC Magazine that the US market is complicated by a variety of infrastructure choices:

I wish I knew more about the network end of things, but I'm not clear that Europe and the rest of the world operate on a single infrastructure style, and they seem to manage to work around this. What's more it seems to me, that they could release a variety of phones over time to accommodate these differences. Vendors would buy time from the various networks and sell SIM Cards based on network requirements. These companies could compete on price and service.

I think we can all agree, that for the most part, people are fed up with the major providers and are looking for alternatives. Could a phone with the clout of Google behind it, that provides a way to be free of these hated entities lead the way to a full-scale change in the way we purchase cell phone coverage in the US? There are too many unknown variables at this point, including cost and features on this phone, but if this comes to pass, we could remember this as a seminal moment in time, when the cell phone business in the US changed forever.

An alternative to the phone networks could be to use a combination of roaming on wi-fi hotspots such as the La Fonera from FON http://www.wi-fiplanet.com/reviews/article.php/3683416 and the Google Nexus ONE phone http://www.electronista.com/articles/09/12/14/googles.flagship.has.major.interface.changes/ running a VOIP app over wi-fi. The more members running La Fonera routers, the more ubiquitous wi-fi will be. And getting paid to run a hotspot isn't bad either.

[rich3800]

An alternative to the phone networks could be to use a combination of roaming on wi-fi hotspots such as the La Fonera from FON http://www.wi-fiplanet.com/reviews/article.php/3683416 and the Google Nexus ONE phone http://www.electronista.com/articles/09/12/14/googles.flagship.has.major.interface.changes/ running a VOIP app over wi-fi. The more members running La Fonera routers, the more ubiquitous wi-fi will be. And getting paid to run a hotspot isn't bad either.

[joe.attaboy]

I don't know if this phone will end "network domination" as much as give consumers more choice. I'm excited about the notion of the Nexus, not because I care about the networks as much as I live the technology (I'm a G1 user on T-Mo's network right now).

I believe the real end of network domination will come when you begin to see more dual-network chip phones (I read just this morning about on in development). A phone that would allow the user to choose between the two GSM networks (T-Mo and AT&T) and the big CDMA companies (Verizon and Sprint) would allow for more flexibility.

I also believe that the reason that PAYG plans are not as big here is because the phone card phenomenon is more ingrained into the European culture. Here, the focus has always been on cheaper cell plans. Plus, the vendors use the fancier phones as come-ons to sign you up. Ask any kid if they'd rather have an Envy with a low-cost unlimited plan, or a Tracphone with a refillable card. They'd pick the latter out of total desperation only.

[pwnvds]

[Duplicate]

[pwnvds]

The idea of an unlocked phone on its own, in my opinion, offers very little added value. Your only other choice for carrier in the US for a GSM phone is AT&T, which is more expensive than T-Mobile. Plus, T-Mobile has always been very lax about unlocking phones - you used to be able to email them after 60 days on a contract and they'd send you the unlock code. I've done this twice with two different phones over the years.

Paying the extra money to not have to sign a contract offers a slightly better advantage if you don't want to make the commitment, but still not much added value. Realistically, most people stick with their carrier for 2 years anyway. Plus, you could always pay the termination fee if you want to leave your contract, and you'd end up having paid the same amount for your phone as if you had bought the unlocked phone.

It is possible (and probably, IMHO) that the phone will be unlocked under either scenario, but just that you'll get a discount if you commit to a T-Mobile agreement.

As for the pay by the month scenario, we already have this, but perhaps without carrier flexibility. Virgin Mobile buys airtime from Sprint and sells it under its own service plan. Same with Cricket and several others. You may not have the option to buy another carrier's SIM card if your phone is locked, but on the other hand, you can choose from a host of unlocked phones on the internet.

The other reason you would want an unlocked phone is if you travel internationally for long periods and you'd want to pop in a local SIM chip for a local number and better (non-roaming) rates. But generally this applies to very few Americans. When I travel internationally it's only for a week or two at a time, and in multiple countries, so paying T-Mobile's roaming rates is usually cheaper than buying local SIM cards.

Personally, I think Google has something more creative in store. I've heard speculation of Google offering its own branded SIM cards and buying carrier bandwidth from T-Mobile to supply data, combined with Google Voice (or something similar like Google Talk, Gchat with voice, whatever) to supply you with a phone number. This is partly why I think the phone will be unlocked either way. There has got to be something bigger than just a new Android phone. I also wonder if it will truly be a Google branded phone or just an HTC phone promoted by Google....this would skirt the "competing with hardware manufacturer" issue a little bit. Google sells advertising and it facilitates this with new and creative ideas. This phone will probably reflect that in some way. The phones specs, pictures, and even pricing (assuming the leaks are accurate) are all available, and Google had to know this would happen since it handed out thousands of phones to its employees. So - what's the announcement tomorrow? What everyone knows already?

You've touched on the essence of this in your article. But it's also worth pointing out that Google participated in the FCC auction for the 700 Mhz bandwidth simply to persuade the FCC to require a level of openness by carriers. This is their motivation - to decrease the barriers in the way of increasing mobile access. I would think that Google has something up its sleeve with tomorrow's announcement which supports this strategy.

[Techwriter10]

It will certainly be interesting to find out of this is the case and Google gets into the bandwidth/SIM business. If so, I would welcome this development if for no other reason than to force competition on the current crop of carriers, but I would prefer to see Google then sell this bandwidth to other SIM card sellers to develop the same kind of market place we see in Europe. Let's see what happens, but interesting ideas.

Thanks for the comments.

Ron