Project Fi: Just another MVNO?

This week Google announced the launch of Project Fi. I have written about Google’s plans to launch as a mobile virtual network operator (MVNO) and the implications for Australia – this is the realisation (v.1) of that concept. Google’s description gives some clues into their strategy centred around their nexus hardware offering, android software and partnerships with MNOs to change the connectivity experience:

‘That’s why today we’re introducing Project Fi, a program to explore this opportunity by introducing new ideas through a fast and easy wireless experience. Similar to our Nexus hardware program, Project Fi enables us to work in close partnership with leading carriers, hardware makers, and all of you to push the boundaries of what’s possible. By designing across hardware, software and connectivity, we can more fully explore new ways for people to connect and communicate.’

What is the offering?

The Project Fi value proposition has some interesting features:

  • Automatic transfer between the T-mobile, Sprint networks and over a million hotspots
  • Simplified pricing: $20 for service, $10 for every GB of data – data is prepaid and unused data rolls over to the following month
  • A cloud-based phone number that enables talk and text from any laptop, tablet or phone

This last feature is a reincarnation of ‘Google Voice’. Voice from the beginning has been a cloud-based phone number that works across devices. Paradoxically the worst part of Google Voice has been its poor integration with your actual mobile phone; the latter has always been developed with the assumption that a phone number and an actual phone are for all intents and purposes the same thing. Project Fi explicitly unbundles them.

How is it different from other MVNOs?

MVNOs exist because the mobile network operators (MNOs), whose networks MVNOs sit over are unable to reach profitable market segments the MNO cannot. While it is the same as other MVNOs in this respect, in other ways it is very different.

  1. Unbundling device from carrier: As with Google Voice which is unbundling the phone from the phone number, Project Fi is unbundling the device from the carrier. The ‘automatic transfer’ makes T-Mobile, Sprint and Wi-Fi mere implementation details which are hidden from the user. In addition, Project Fi users (at the moment) can only connect through a Nexus phone seemingly allowing Google to control the connectivity experience and the preference between WiFi/Network. This, of course, makes connectivity a commodity – literally a ‘dumb pipe’.
  2. Google is a media company: Extending Project Fi further there are other differentiating features. Google clearly wants to incentivise usage of Google’s services and thereby capture more information about its users, improving its algorithm. One could see Google offering free data for streaming on ‘Google Play’ or bundling other Google services like Google cloud or Nest. The more people it connects to the internet (take note, voice is less important here), the better. Simply… other MVNOs are not as interested user’s data as they don’t sell advertising.

How is it similar?

Despite these differences there are at least two main similarities which are also limitations of MVNOs:

  1. Pricing: Project Fi is not that much cheaper than other plans. A comparison of similar plans shows that if you use a lot of data you typically pay significantly more than the major carriers and with a number of conditions. The reason is that MNVOs are dependent on the MNOs they operate on and the MNO has little interest in allowing an MVNO to undercut it on price.
  2. Network Coverage: MVNOs are only as good as the networks they are on. Project Fi runs on T-mobile and Sprint which are the smallest of the US carriers and despite the alternating technology coverage is still likely to be limited.

Will it succeed?

I’m sceptical about Project Fi having a meaningful impact on the US or global market in the near term – I don’t think Australia is a priority market (high iPhone penetration a major barrier). MNOs have big budgets for advertising and retail distribution which is not Google’s competency. This may be why the launch has received little fanfare from Google and is also called ‘Project’. I am more interested in their Fibre offering or if they were to buy T-mobile as these strategies indicate real ‘skin in the communications game’.


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