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Thursday, April 23, 2015

Google Project Fi MVNO: As expected, not a big deal. For now.

I've had a look through the details for Google's long-rumoured Project Fi MVNO. It's something I wrote a blog post trying to second-guess a few months ago, and it was finally announced yesterday (I did pretty well with my predictions - see below).

Overall - my take is that it's a mixed bag. It's got some clever features - but also some serious limitations. And it's niche. Categorically - and like Apple's SIM from last year - it's not a big deal or a strategic worry for the rest of the mobile industry, at least for now.

The most glaring problem: it's an invite-only trial, and needs a specific and expensive phone, the Nexus 6. I strongly suspect a lot will change, based on observed user behaviour and future needs. It's primarily a learning exercise for Google, and I suspect some of the things it will learn will be uncomfortable for it.

As I wrote in February: "it will likely have one or two tactical near-term wins, but will be part of a cautious, long-term experiment and fishing-trip"

The pricing & positioning

The main thing that strikes me is that it's not especially cheap. Yes, $20/month is a good headline price for US consumers who have a major-operator plan today, but $10/GB isn't really that good a deal, unless you're a mostly-WiFi user who just needs a bit of cellular data for maps and emails when you're out and about. If you're using 5GB, 10GB or more per month (as you might expect from a Nexus owner), it starts to look a bit pricey, especially compared to T-Mo US or a number of international peers. There's a good comparison with other US plans here.

Moreover, the Nexus 6 is an expensive phone - $650-700 outright, or $27-29/mo on installments. Add that into the calculation, and the plans definitely aren't quite so tempting.

The "pay for what you use" idea is nice - but not exactly new. It's basically the same way that most people outside the US pay for fixed-line telephony: fixed monthly fee, plus variable per-minute calling charges, billed afterwards. There are also a few hybrid pre/post-paid plans that look a bit like this, although the "budgeting" feature is good, as is the lack of long-term contracts and punitive overages. It's a sensible and "nice" way to price for mobile service (especially the "line rental" Basic component which has long been missing, as I discussed 5 years ago, here) - and that might nudge the other US telcos into following suit. 

The overage thing is important - it's the sort of minor-seeming detail that might change user behaviour, as it removes the "fear" factor of data usage. Overage fees are essentially "fines", and unless there's a good way to track how close you are to the limit, most people will either be cautious "law-abiders" or resentful "grumblers" who've essentially "chanced" a parking meter and got a painful ticket.

Ultimately, Google is always going to be constrained by the wholesale deals it can cut with Sprint and T-Mobile - and they're not suicidal or stupid enough to give such a bargain it undercuts their own main brand. (Indeed, Sprint reportedly has a renegotiation clause if volumes get too high). And while Google can swallow some costs if it chooses to cross-subsidise (how much is your privacy worth, per month, either to you or Google?), it only has limited wiggle-room. It also doesn't have (at the moment) the extra bells and whistles like free content, T-Mo's zero-rated music and so on.

Roaming is a different story. Even capped at 256kbit/s, $10/GB for 120 countries is a great deal. One likely unintended outcome is that some regular travellers will use this as a second "roaming phone" as $10/GB and 20c roaming calls are pretty cheap in many places in the world, and less hassle than getting local SIM cards. 1GB is enough for most travellers for 3-7 days, if they use WiFi at their hotel & avoid video. They could even tether an iPhone to it - although a $650 Nexus 6 is an expensive modem). 

If someone gave me a global 3G-speed SIM for a $100 personal hotspot at $10/GB, I'd have it tomorrow, even with a monthly fee. Basically, it translates to $10/week for mobile maps, IM, social and email, plus some local tourist guides and airline check-in. As long as you're somewhere with plenty of WiFi for heavy lifting downloads (maybe offline maps, or swipe in most of the local Google Map to the cache), it's a bargain.

So that's the pricing - interesting, cheap for some people, needs an expensive phone, user-friendly, but not that amazing unless you're a frequent traveller.

What about the technology and the services?

Most notable is what Google calls the "Project Fi SIM card", which supports multiple cellular networks. It sounds like a standard multi-IMSI SIM, which is different to the Apple SIM, which is a programmable SIM. Neither are "Soft SIMs". 

There aren't too many multi-IMSI operators, but they're certainly not unknown (eg Truphone). There's no mention of choosing operators from the home-screen like the Apple iPad's approach - you get what you're given. And although it can switch from T-Mo to Sprint, it doesn't sound like that's in realtime, per-connection - the FAQ promises not to kill your battery, so I guess it just checks periodically, or maybe uses Google Now to plot your normal journeys and switch at the appropriate time. I'm curious to know what the switch-over timelag is - I'd guess it's probably noticeable if you're mid-call or mid-data session.

There is one similarity with the Apple SIM though - a lack of reliance on the underlying phone number associated with the phone SIM/IMSI. Google Voice has its own number range in the US, and people can port-in their existing number, while Apple's iPad+SIM doesn't really need a phone number at all.

The WiFi implementation is a bit opaque. The website uses my trigger-word "seamless" which makes me have doubts straight from the offset. It's not clear exactly which hotspots go to make up its curated selection. Obviously it will have its own locations such as US branches of Starbucks, but beyond that it's vague at present. Is it an in-house database, or a third party's? It talks of "over a million" hotspots but that's small beans compared to DeviceScape (20m+) and Fon (15m). I'm wondering if it's done a deal with one of the US cable operators with a decent WiFi footprint. 

The problem with a lot of these "free, open" WiFi deals is that they're often not in the places everyone wants access. As I wrote the other day, many locations have free WiFi, but use a splash/log-on page for advertising, registration or company-specific T's & C's. Would the guest-access WiFi in a hotel, corporate office or ice-cream-sponsored bus just allow Google users to bypass the front page? I doubt it, unless Google is paying for the privilege.

All that said, there is no charge for WiFi use (thankfully, or else it really would be a dud) and the auto-on VPN is a really good idea that ought to be copied by everyone. I'm curious how much of the cellular traffic is encrypted too.

The voice/text/Hangouts thing is also a bit opaque at the moment. As Google Voice "owns" the number, it can theoretically do a bunch of cool things in the cloud, although for now it seems to just be multi-device / WiFi-access that's been enabled. There's no mention of cool contextual features or inbound call-management or developer APIs.

It's unclear when it uses the native telephony function on the device, and when it's "OTT-style" VoIP. It's also not obvious if it uses VoLTE or 3GPP WiFi-calling at all, based on the underlying T-Mo/Sprint platforms - although clearly it will need to have the mobile operator's 2G/3G circuit-calling engaged when it falls off 4G coverage or is roaming, anyway. (Sprint hasn't launched VoLTE yet anyway, and T-Mo's isn't available everywhere in the US, I believe).

In fact, I'm not aware of any MVNOs worldwide that are using VoLTE, even if their host networks have switched it on. In general, IMS and MVNOs don't play very well together - I remember once asking someone from 3GPP about this, and it was clearly the first time anyone had ever mentioned them to him in the same sentence. A bit more thought has gone in since then, but it's after-thought. Given that this would also need to integrate the Google Voice core network [which I don't think is IMS-based] with 2 different MVNO hosts, I doubt it.

I suspect that the Nexus software uses Internet VoIP where it can, and cellular telephony (circuit) where it has to, without this being apparent to the user. The "seamless handover" is promised when moving from WiFi to LTE - but the Fi website doesn't mention LTE to WiFi, nor WiFi to 2G/3G. Given that there's probably a timer so the phone doesn't annoyingly connect to WiFi every time it gets a fleeting glimpse for a moment, I suspect that 4G-to-WiFi isn't supported.

The fact that Google Hangouts is used for text & talk on secondary devices (with your primary Google login) means it is clearly VoIP some of the time. There's no mention of video yet. There's also no explicit mention of WebRTC yet, but it wouldn't surprise me if some of the versions using Chrome are exploiting it, although I doubt that the Hangouts plug-in for Firefox, IE & Safari does. Obviously, RCS will be irrelevant.

To be honest though, there's no real massive innovation I see around voice and messaging here. It's still phone calls and SMS, or near equivalents. One number ringing multiple devices, or over WiFi, is hardly headline material - it's been around for a decade.

I haven't had a chance to think through the privacy implications yet, but clearly data and analytics is going to be a big part of this. I'll leave that to others to comment on.

A lot of this is near-impossible to internationalise. Google Voice doesn't have port-able number ranges, and the interconnection regimes may work against its pricing. I also don't think it would be able to get wholesale rates low enough for $10/GB in some countries - if MVNOs are allowed legally at all (often, they aren't). VoIP isn't allowed in many places too, plus there's obviously the privacy angle to consider.

So, how were my predictions?

I did a post back in February where I had a go at predicting the Google MVNO features. (Read it here). I've had a lot of discussion about both that post, and an earlier one about the Apple SIM. On a couple of recent presentation tours I've done with investment analysts & visiting their fund-manager clients, both topics have been of great interest.

Looking back, I was pretty accurate, it seems. My big "miss" was that it's a smartphone plan, not a tablet one like the Apple iPad SIM. But beyond that, I was pretty spot-on:

  • Yes, it's got a SIM card, which I'd wondered about. I got the multi-IMSI bit right, and it doesn't seem that it's doing per-second realtime hopping from one network to the other
  • No, there's no retail network - for now it's online & invitation-driven
  • It's not "WiFi first", it's "WiFi as well" - and yes, the curated hotspot network is small.
  • Yes, it's small-scale and "fishing expedition", not a large, mainstream plan aimed directly at the big US carriers.
  • Yes, it's got innovative pricing for data, although I didn't quite get the right format
  • And no it's not SIM-only for all unlocked phones
  • Nothing fancy with voice/SMS beyond Hangouts as an extension
  • It's Neutral, as far as we can tell, with no obvious policy-management complexities
  • No balloons or drones are being harmed in the making of this MVNO

Overall... worth watching, but nothing earth-shattering

In a nutshell, like the Apple SIM, Google's Project Fi is not a big deal. For now. It will appeal to a few niches of users, has a couple of nice features, and is a cautious initial step that might have a longer-term trajectory. It likely won't work easily outside the US, either.

Like Apple, I suspect Google has a long-term view on what it would like to see around the 5G launch timeframe of 2020. It might nudge AT&T and Verizon on their pricing approach for data, much as Google Fiber nudges on FTTH. It gives Google great insight into real customer behaviour, that should help both new products and regulatory arguments. 

But is it changing the landscape? Not really. And outside the US, not at all.


Disruptive Analysis is a research firm and consultancy that specialises in assessing technology and business model shifts in telecoms, especially mobile. As well as reports on Mobile Data and WebRTC (see links at the top) it regularly presents on upcoming disruptions such as Google/Apple, the role of WiFi, definition of 5G, and the impact of Peak Telephony and the Future of Voice. For more information, contact information AT disruptive-analysis DOT com.

See also this presentation covering a range of pertinent trends and disruptions.


Anonymous said...

you conclude it's not a big deal ...
It seems to me a no-3gpp but a web only voip solution. based on IP access only. Is it not the kick-off for the revolution the operators have to do in the next years ? 2 years max ? to the web voip ? then how many operator will be able to keep a service part ?

Joey said...

Would it not have made sense for them to explore being an IMS-only MVNO?