Does Google Inc. Think Wireless Data Should Come a la Carte? What a Leaked Bit of Info Might Tell Us

By Markets Fool.com

A few new details recently leaked about Google's anticipated MVNO service, which, rumor has it, would use both Sprint's and T-Mobile's networks. The details come from a purportedly leaked firmware image for the Nexus 6 containing an app for the rumored service pre-installed. Android Police was able to get its hands on the image and break down the details.

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For the most part, the leaked app functions like any other app from a carrier like AT&T or Verizon . It also appears to allow users to activate and deactivate service as well as request a new number or initiate a transfer -- features absent in regular carrier apps.

Most importantly, the app appears to reveal Google's plan to only charge users for the data they use. If a person goes over his allotment for the month, he's charged the same flat fee per gigabyte as his original plan. If he doesn't use all of his data, he receives a credit back to his account. These features, if they become reality, have the potential to put pressure on the main wireless carriers to offer more flexible data plans.

Going after tablet users?
Before diving into a potential impact on the major wireless carrier, it's important to note that Google's MVNO is expected to be limited to certain devices like the Nexus 6 and Nexus tablets, and it's intended to be small in scale. However, the best application for the a la carte data approach that seems to be offered via the app is probably for tablets. Tablets, unlike smartphones, aren't traveling and using data all the time, but when they do travel, they can use quite a bit of it.

All four major carriers have been pushing customers to buy connected tablets, offering discounts on devices and small amounts of data for free. In fact, AT&T, Verizon, and Sprint all added more tablet customers in the fourth quarter last year than phone customers. Part of this is due to pressure from T-Mobile offering to pay early termination fees for AT&T and Verizon, which has pushed churn higher and led to more phone net adds at T-Mobile than new tablet customers.

But adding tablets to plans is also strategic for carriers. With more devices on a plan, it's less likely a customer will churn out. The leaked app from Google appears to let users sign up for data-only service for things like a tablet. The flexible service could lead to more device sales of Google's Nexus tablets, which feature Google's services more prominently, or just Android tablets in general, which is also good for Google.

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Disrupting the disrupter
Despite the expected limitations on a Google MVNO, it has the potential to disrupt the wireless industry even more than T-Mobile's Un-Carrier strategy. The plans sound very similar to Google Fiber in that Google isn't trying to make a significant profit from the business, but rather exact change in the industry. In this case, it wants to increase the amount of data used on smartphones and tablets by getting rid of overage fees and making it easier to buy more data when users need it.

T-Mobile has been working to get more subscribers to use more data. Some of its plans allow subscribers to roll over unused data allotments for up to 12 months. AT&T followed suit by allowing subscribers to roll over data for one month. Actions like this allow many users to subscribe to lower data allotments or avoid overage fees, but they're not nearly as drastic as Google's rumored plans.

Google could put pressure on telecom companies to offer more flexibility in their data plans, which could ultimately drive down revenue for AT&T and Verizon, which make money off of overage fees. Additionally, decreasing the amount of data allotments that remain unused would have a negative impact on profit margins.

Only time will tell just what Google will present, but it could very easily have some negative impact on carriers. Without control over the wireless spectrum it would be licensing from carriers, however, Google will always remain under their thumb to some degree.

The article Does Google Inc. Think Wireless Data Should Come a la Carte? What a Leaked Bit of Info Might Tell Us. originally appeared on Fool.com.

Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Google (A shares), Google (C shares), and Verizon Communications. The Motley Fool owns shares of Google (A shares) and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.