Communication is the go-word for the development of any and every economy. It is a highly competitive and also extremely lucrative market. Making its foray into the telecom and communication industry, Google Inc. (GOOG, Financial) announced its Project Fi, to roll out its wireless service; the company has decided to piggyback on the network infrastructure of Sprint Corp. (S, Financial) and T-Mobile US Inc. (TMUS, Financial). This is a step forward to become a major player in the communication world and Google is set to raise the stakes much higher. There will be important changes in the market sending out clear signals to the investors and market leaders. Most importantly, out of all the other networks, Google’s choice of Sprint and T-Mobile may seem like an endorsement, and this will boost their fortunes. If this project is a success, these two networks will surely be among the frontrunners in the game, already having done the dream deal which has given them an edge.
What is Project Fi?
Google’s wireless project has taken a concrete form and is in its first step of launch. The company plans to revolutionize the pricing platforms of the connectivity market by kicking off a $20 a month package for basic voice and text service, and $10 for each gigabyte data used in a month. In an extremely competitive market, the company is also trying to the elbow its competitors by letting its users continue using data purchased in the previous month which wasn’t used up. At present, if you have credit left and it’s the 31st, it all goes to waste. But that is all about to change.
In a posting on the company's official blog, Google Vice President of Communication Products Nick Fox said that the company was launching an "early access program" for Project Fi for Nexus 6 smartphone users. The post went on to give few details of its plan, including how it is starting off as a small initiative but will eventually have far-reaching effects. The company plans to free communication of a device restrictions, which means any gadget and every gadget that can tap into the internet will be able to communicate with any other device. The aim of the project is obviously not price-driven profits but to make inroads into the telecom market by improving wireless connectivity through its service.
Sprint-ing to success
It makes one wonder about Google’s choice of its telecom partners. Project Fi with Sprint and T-Mobile under its umbrella seems like a very good face-off with the likes of Verizon Communications Inc. (VZ, Financial) and AT&T Inc. (T, Financial). Sprint and T-Mobile have nothing to lose with this partnership but a lot to gain if it becomes a success story. Google’s blog seems to have a confident tone and will likely see a very good response to this move. If that is so, one must watch out for the turn of fortunes of these companies. Going by the backing and success rates of Google’s projects, it is a sure-shot upward trajectory.
Our take
For other rivals, who have been jostling for an edge in this highly competitive market, Sprint and T-Mobile seem to have walked away with the larger share of the pie. Shares have seen a spike since the announcement and what needs to be seen is whether this trend continues. For the backers and investors, the two telecom partners will obviously be an area of interest as they up their stakes in the two companies. Google’s Project Fi will be closely watched by analysts and business leaders since this will for sure decide the future leaders of the telecom industry in the US soon and add a new dimension to communication technology globally.
