Analysis: Will Google and VZW strike a content deal?
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Google is reported to be in talks with the country’s largest wireless carriers for content deals to put Google’s bevy of search, messaging and content applications on their mobile phones. In addition to the Wall Street Journal naming T-Mobile as a seller of a future Google-powered data phone, Reuters has reported Sprint and Verizon Wireless are both in discussions with the Internet search giant.
Sprint is already dealing with Google to provide search and portal applications for its new WiMAX service, Xohm, and could easily extend that deal to its CDMA network, particularly if Sprint launches dual-mode WiMAX-CDMA devices. But a Verizon Wireless deal with Google, at first glance, seems like a long shot. The two companies have been contentious in recent months, particularly over the 700 MHz auction. Google has demanded that a portion of spectrum be reserved for “open access” networks, over which any device or application could operate. Verizon Wireless has fought to keep the licenses closed, going so far as taking the FCC to court. Last week VZW dropped its suit only to have it picked up by CTIA.
Beyond that policy fight, Google and Verizon Wireless seem to have diametrically opposed views to the mobile Internet. Google has promoted an open-access vision for wireless broadband, in which any Internet service provider is free to use the wireless pipe to offer their services. What’s more, Google has traditionally offered its services for free, depending on advertising for its revenues. Meanwhile Verizon Wireless has traditionally been the most closed of the operators in its mobile data services, restricting access to unauthorized sites and content on its network. It has also traditionally charged for individual content service on top of regular data plan fees. Any discussions Google and Verizon Wireless may be holding could become log-jammed by their fundamentally different approach to data services.
But the gap between VZW and Google does show some signs of narrowing. On Verizon Communications’ earnings call, president and chief operating officer Denny Strigl hinted at possible negotiations the companies were having when answering a question about a reported meeting between the carrier and Google about the 700 MHz auction. “As you would expect, we meet with lots of companies and people all of the time, including companies like Google,” Strigl said. “Frankly, we don’t have any other comments, and as you know, it is not our policy to comment on rumors or discussions we may or may not have had.”
Any compromise over the open-access provisions of the auction, however, don’t mean the two are cozying up in a content deal. Even that may not be so far-fetched, though. The differences between the way VZW and Google see mobile data services may be lessening. Verizon Wireless spokesman Jeffery Nelson, while making no comment on any possible negotiations between the two companies, said that the perception of VZW as a closed provider isn’t true anymore. Verizon has taken several steps to dismantle its walled garden recently, Nelson said. It has opened up its WAP browser to access any site, though all sites may not render because of coding issues. It now supports some off-deck content downloads from third-party content developers through partners like Bango and Motricity. “More and more of our content is coming from the off-deck environment,” he said.
But what VZW doesn’t allow is a free-for-all, Nelson said—it requires that there be some supervision of the content providers that make it onto its network to prevent fraud and abuse, either by itself or its partners. Nelson also pointed out that a large proportion of its subscribers are on family plans, and Verizon Wireless needs to restrict access to inappropriate content.
Google’s standard applications such as Gmail, YouTube and Google Maps could easily fit into the more open content framework that Nelson detailed, but the two might still get hung up on other aspects of the agreement. The Journal reported that Google is not just interested in distributing mobile versions of its popular apps—it already does this—but wants to create an application framework that penetrates deep inside the phone to the operating system layer, where it would gain access to key network functions like GPS, Bluetooth and the IP communications layer.
What Google appears to be planning is a Google phone manufactured by independent handset vendors, much the same way Windows Mobile phones are made by device manufacturers, not Microsoft. While Verizon Wireless does support numerous smartphone platforms on its network, its consumer devices and the bulk of its phones are built on Qualcomm’s BREW platform, a runtime environment that sits between the application and operating system. That type of setup won’t gel with Google’s more ambitious plans, but it’s debatable whether Verizon Wireless would give the Internet provider unrestricted access to the network. Another potential problem would be the developer program Google is advocating, in which outside developers could build applications for the Google services framework. Authorizing a few Google-built apps for Verizon Wireless’ content deck may not be too big a deal, but testing and authorizing hundreds of unique third-party Google apps could present a problem.
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