Last month it was Amazon which was supposedly keen to buy Sprint’s Boost Mobile unit, which it plans to divest to help soften regulators’ views of its proposed merger with T-Mobile US. Then, last week, Google was reportedly in the frame via a tie-up with Dish Network, another likely bidder for Boost. Google quickly denied such an alliance, but the merry-go-round of speculation over the fate of a fairly minor part of the Sprint business highlights the uncertainty over whether the web giants really do plan to get into mobile connectivity, with disruptive impact on the US telecoms market.
From the point of view of Sprint and TMO, although interest from Amazon or Google could push the price of Boost up, it would be a Pyrrhic victory if they ended up enabling a strong new challenger. It would be better to sell to Dish, probably for a lower fee, but the fourth MNO that would be created would be relatively weak. Dish has a patchwork of spectrum but has failed to launch any commercial network except one for NB-IoT, and then only under duress from the FCC. And its core pay TV business is in decline, so it is unlikely to be able to invest in building the national 5G network it keeps promising, unless it gains an infrastructure partner or an acquirer of its own.
Boost would bring it some additional spectrum, a customer base and a low end brand, none of which would address its central challenge – that it cannot afford to build out a full mobile broadband network without partners, even adopting the cloud-native, capex-light model that Dish chairman Charlie Ergen has talked up. He pointed to the examples of Reliance Jio and Rakuten, two greenfield MNOs in competitive markets which are using modern software-driven techniques to deploy new networks considerably more cheaply than their established rivals. But these are operators with deep-pocketed parents with growing businesses behind them, unlike Dish.
Google, or Amazon, would provide the resources that Dish needs to launch a full network and a viable national MNO. But what would be their motivation to do so? Google has certainly experimented with building its own connectivity in the US, notably with its Google Fiber experiment, and its Google Fi multi-operator MVNO. However, both these lacked the funding or scale to turn their parent into a new telco – instead, they seemed to perform two functions. One, to allow Google to test new technologies and service models directly; and two, to kick established operators into action in expanding their own broadband and mobile networks, by implying that if they did not bring high speed internet (and Google services) to more of the population, Google itself was fully able to do so.
Amazon has experimented with various wireless technologies, and has itself been linked with Dish on several occasions. Both Amazon and Google have been very active triallists of the USA’s CBRS shared spectrum scheme. But just as Google does not need its own network to drive its consumer services forward, so the speculation that Amazon planned a mobile network to support its Alexa devices seemed misplaced. It may have pioneered a new model of embedded connectivity with the Kindle e-readers, but it did not need its own network then (it used Sprint’s, and later AT&T’s), and it doesn’t now, for its consumer and ecommerce business.
It is far more likely that any connectivity efforts these two giants make will be designed to enhance their cloud businesses by supporting private, enterprise and IoT platforms, which may not be adequately enabled by the main operators.
Google has been clear that it does not want to be a network operator. Its role is to demonstrate how things can be done differently in order to enable universal, affordable high-speed internet access – the lifeblood of the search giant’s entire business. Increasingly, its growth is coming from new enterprise cloud and IoT services so the emphasis of its connectivity investments is likely to shift in that direction.
Unlike Google, AWS has been linked more firmly with Dish in the past, and to discussions about cooperating on, and co-investing in, an IoT-focused neutral host platform based on Dish’s spectrum and AWS’s cloud – which it is also extending out to the edge in many areas, aligning its work even more closely with the needs of the IoT, and with the distributed nature of the telecoms business.
The thinking is that AWS would help fund the build-out of a network in Dish’s spectrum in return for being an anchor tenant and influencing how it is planned and configured. For Amazon, that would bring it a mobile network which could be optimized for its own ends, from internal logistics usage to AWS services to supporting mobile Prime applications to testing new devices from its secretive R&D arm. This would come at far lower cost than seeking its own spectrum, but with better control than an MVNO or WiFi approach.
For Dish, the investment and the anchor tenant would make the economics work at last, and it could also launch mobile options to its TV customers in bundles, to make it more competitive with AT&T’s DirecTV and with cable providers.
“This would be an excellent vehicle for Amazon to dip its toes into the wireless business,” said analyst Mark Lowenstein of Mobile Ecosystem. “It’s undoubtedly a better network deal than they would get from AT&T or Verizon.”