Google-T-Mobile speculation spreads over Web

Some say Google buy could lead to free phones for T-Mobile subscribers

Web discussion: Google Inc. should buy T-Mobile USA from its German parent and distribute free Nexus One Android-based smartphones to the carrier's 33 million subscribers. The free smartphones, of course, would run location-aware Google mobile ads.

Sound ridiculous? Or not?

Well, that scenario builds on the suggestions of a few serious financial thinkers and is still a fairly hot topic among bloggers and others a week after reports surfaced that T-Mobile may sold or spun out of the parent company.

To be perfectly clear: Google buying T-Mobile is just speculation. In fact, some in the online world are just suggesting the move. Neither company will comment at all about the speculation.

One apparently serious proponent of Google buying T-Mobile is an unnamed contributor to the Web site of consulting firm Gerson Lehman Group's Web site. The contributor is labeled an "expert" whose analysis is his or her own and not that of GLG.

"With Google Voice and now the Nexus One, like it or not, Google is becoming a telecom operator," the GLG analysis says. "I believe Google views the largest U.S. operators as competitors and are obstacles to owning the mobile channel, and if they purchased T-Mobile they would pick up 33 million new Google Voice users."

TmoNews, which calls itself "The unofficial T-Mobile blog" site, took that GLG nugget and added the notion that T-Mobile's 33 million subscribers should get free, Google ad-supported Nexus One smartphones.

"Imagine Google suddenly has 33 million Google Voice customers," wrote TmoNews blog contributor David. "What is to stop them from giving away their phones ad-supported? Would people really go for phones that are free, but inundated with ads every time they make a phone call, or go to browse the web?"

Some TmoNews contributers hated the idea of ad-supported free phones; others liked it. One commenter, Ruben, suggested that ad-supported phones could lower subscriber costs and that a Android third-party developer could "come up with something to block [ads] on Android phones."

Some commenters downplayed any thought of a Google-T-Mobile combination, noting that it would hurt other carriers already supporting Android phones. "Honestly, I do not see Google taking any part of T-Mobile," wrote voiceofreason. "They have too much invested in the Android product with other carriers."

The spector of a Google owning a carrier in addition to all its other products led one commenter, prettyboy85712 to post: "Google+ T-Mobile=Skynet." Skynet is an ominous artificial intelligence in the Terminator film series.

A columnist for PC World, David Coursey, picked up on the general discussion, and linked to a video blog by a reader named Mark Russell who sees the long-term logic of Google buying T-Mobile.

Coursey notes that Google has already announced a "What's Nearby" location-based feature that could be a key in any Google-T-Mobile scenario. "What's Nearby" for Googles Maps is available on Android 1.6 and later devices.

The feature lets Android users get a list of the 10 closest places, such as restaurants, shops and points of interest, from any place on a Google map. Coursey believes with what Google knows about its users that a location-based ad service "could be so finely tuned that users might actually look forward to its messages."

Aside from Web commenters, two analysts said in e-mails that they don't see a Google-T-Mobile marriage, although they conveyed a sense of 'nothing would surprise me when it comes to Google.'

A Google-T-Mobile deal "doesn't make sense for the Google business model, which is advertising, but neither did making a phone," remarked Gartner Inc. analyst Phillip Redman. The biggest doubt is DT [T-Mobile parent Deutsche Telekom] actually selling, he added.

"I'd be surprised that DT would sell off one of its more profitable ventures, as most companies are looking for international expansion in cellular," Redman said.

Added Jack Gold, analyst at J. Gold Associates: "I'd be very surprised if Google bought T-Mobile. It would divert them from their primary business of creating services for users and advertisers. I assume they could afford such a purchase, but would it make financial sense, given how difficult a business wireless is? And do they want to compete with other carriers who are just ramping up Android?"

Gold said if DT moves ahead with divesting T-Mobile, it is more likely an IPO will be the avenue, "although I'm not sure it will be very well received."

A long shot is that a foreign carrier, maybe from China, comes in to buy T-Mobile USA, Gold added.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen, send e-mail to mhamblen@computerworld.com or subscribe to Matt's RSS feed .

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