Google has struck a deal with the FCC and usage agreements with other wireless carriers to begin offering Google Wireless as another option in mobile phone service in addition to the big four, AT&T, Verizon, Sprint and T-Mobile.
Instead of building its own network of towers, Google has signed usage agreements with Sprint and T-Mobile, representing approximately $1 billion in value, which will allow it to re-sell service at rates as low as $2 per gigabyte according to Macquarie Securities analyst Kevin Smithen.
Service could start as soon as 2018 according to some reports. Sprint is still uneasy about the agreement and put caps on overall data consumption it will allow Google to buy and re-sell. Google is expected to offer wireless and data service a below retail pricing of the four major carriers, which could force others to reprise their own offerings.
Usage agreements are common, with the likes of Wal-Mart, Virgin Mobile, Trac Fone, Best Buy and Target all in the same game.
Normally for wireless carriers, it is a good deal, they get to sell their unused capacity without incurring the usual expenses such as marketing to acquire new customers, so its a net profit for them.