January 5, 2010
Posted by Chris Riley

I've complained a good bit, both here and in filings to the FCC, about the state of the wireless industry. I yearn for better and more affordable wireless services, with devices sold independent of carriers, giving consumers real, meaningful choices. Needless to say, stories of an upcoming "Nexus One" phone sold directly by Google piqued my attention. Like many others, I hoped that the phone would transform the wireless sector into a more consumer-friendly place.

Well, the Nexus One is available now, and yes, and you can buy it unlocked directly from Google — for $529. Or you can buy it with a two-year T-Mobile contract for $179 — which, by the way, is exactly $350 less than the unlocked version. Apparently, soon you will also be able to buy it at a subsidized price with Verizon service or Vodafone.

Why's Google doing this? Primarily, to extend their search business into the mobile space, as the Washington Post notes). Maybe Google's concerned about the Verizon-Bing partnership, although consumers seem pretty unhappy with it at the initial stage.

Since the mobile device will become, for Google, another gateway to advertising, why include the wireless carrier as a middleman? During a press conference, a Google representative noted that the company can simply cut out the costs of the carrier as the device salesman, including expensive print and advertising campaigns put on by the carriers (not to mention, lawsuits over said campaigns).

Also, Google has been having a bit of an Android fragmentation problem, with a range of devices showing various Android-based capabilities (see Andy Rubin from Google on GigaOM). In fact, not all Android applications can run on all Android devices, a phenomenon that can be fatal for a nascent platform. Offering one direct-from-Google Android phone may improve the visibility and image of the platform, as Apple’s direct-to-consumer iPhone has done for its platform.

So, what do I think about it, as a consumer and a policy advocate? I'd say my reactions line up well with Stacey Higginbotham over at GigaOM, whose article is titled "The Google Phone Won't Open Up the Wireless Industry." Like Higginbotham, I feel that there is a lot more that could be done with devices to unleash a Schumpeterian creative destruction upon the closed wireless model, but we won't get there with the Nexus One.

Don't get me wrong. This new phone helps, a little. Once the Nexus One is available as a subsidized phone from both T-Mobile and Verizon, we may find ourselves in a place where at least those two carriers see somewhat more incentive to compete over price and quality of their wireless service, because a consumer who decides on a Nexus One will have a choice of carriers. But this isn't exactly a revolution — in fact, it's what we’ve seen already with the Blackberry. Some Blackberry models are exclusively available through one carrier, but enough variants are out there that a consumer who wants a Blackberry can get service with anyone. The only reason the Nexus One may be more helpful is that it's the phone du jour, so it carries more political and cultural weight. It lends more evidence to arguments that exclusive arrangements aren't necessary for device manufacturers to bring phones to market, and in fact may not even be beneficial for the device manufacturers.

But as Stacey suggests, we could do much more. What about software-defined radio phones, or even phones with multiple radios inside them, that could be ported from one carrier to another? That would be real change, and might better justify a $500 up-front expense. We're already seeing this type of hopping – many new smartphones switch to Wi-Fi when it's available to get faster (and, usually, free) data access. Now imagine that your phone could use any 3G network, 4G network, Wi-Fi, or the TV White Spaces — whichever is performing best where you are. In fact, imagine that your device could pick one of any of these networks dynamically, for each packet, a technology that Google apparently already has a patent on. That may be a ways away — or it may never happen — but I do have hope still for the Nexus Two... or Twelve.

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