No one likes paying cell phone bills. Spending $100 for a wireless plan to fuel a smartphone is so commonplace that it has become a necessary evil. Who do Americans have to thank for these outrageous prices? Look no further than the near-monopolized companies, Verizon and AT&T, which dominate 75 percent of the market for cell service. Sprint and T-Mobile are the next big names, but few consider them real competition for the other two giants.
AT&T has a tight grip on American wireless consumption, despite the company’s widespread disdain amongst consumers.
In 2013, AT&T imposed a new administrative fee on every wireless subscriber: 61 cents. At the time, the company faced public backlash over the new charge. Consumers simply wanted to know why. Joe Hoffman at ABI Research commented the fee is an indicator of the company’s awareness of its market.
“But why 61 cents, why not $1 or $5 or $10? Because AT&T understands price elasticity of demand,” Hoffman said. And by imposing this fee, AT&T added $500-600 million to its bottom line without adding or improving any services. What a smart company. The idea of price elasticity of demand means AT&T can afford to add new arbitrary fees, potentially lose customers and yet still profit from the change. What hard-working American wants a company with so much power it can add arbitrary charges to all its customers and be satisfied?
Enter Google. The world’s favorite search engine has been adding services to connect people for years. Google launched SMS messaging and VoIP calling in their Hangouts app available for every device. Consumers can receive a Google phone number at no cost through Google Voice and use their computers to make cheap international calls. Google’s Android mobile operating system is now the most widely used smartphone OS. The one thing Google lacks to put all the puzzle pieces together is a wireless subscription package.
If Google enters the market as a wireless carrier, the impact could be tremendous for the consumer. Google is reportedly in talks with Sprint and T-Mobile to use their existing wireless networks. Since Sprint and T-Mobile are seemingly cognizant of the strength of their opposition, the smaller companies are vying for Google to partner with them. Almost every tech savvy person knows the fierce competition between Google and Apple, and it would only be a matter of time before Apple answers Google’s call.
There are a number of risks involved with investing in a wireless service provider. Not least of these are the Big Four companies: AT&T, Verizon, Sprint and T-Mobile. Yes, even if Google strikes a deal with Sprint or T-Mobile, the providers will certainly do whatever they can to prevent cell phone service from becoming a common commodity. If service is intermittent or unreliable, it is not Sprint or T-Mobile that will be blamed, and Google knows this.
In the fight for net neutrality and fair market usage, though, no company has been as vigilant in protecting freedom for the Internet as Google. The company spoke out against AT&T and Verizon when the companies implemented data caps; Google also criticized T-Mobile for offering supposedly unlimited data plans but throttling users’ data speeds once they reached a certain limit. The road ahead will be difficult for Google, but it could be very beneficial to wireless subscribers in the future by providing more flexible options.
