Google has never been shy to announce an ambitious and audacious plan. The company has taken on self driving cars, flying delivery vehicles and the recently pulled Glass experiment, to name a few. But Google’s latest multi-billion dollar initiatives run a lot closer to its initial business plan.
The first announcement was that the company was teaming up with Fidelity to pour $1 billion into SpaceX, Elon Musk’s commercial rocket company, in exchange for a 10% equity stake. Financial reasons aside, the goal here is to properly equip SpaceX with the resources to go forward with its newly announced satellite program. The project would launch a network of hundreds of satellites which could provide Internet access to people in the most remote and unconnected parts of the world. As Musk explained in Businessweek, “the speed of light is forty percent faster in the vacuum of space than it is for fiber.”
This is not Google’s first attempt to expand Internet access to the 4 billion or so currently without it. Its Project Loon, which utilizes balloons that would fly lower than SpaceX’s satellites but would operate according to the same principles, has been in public testing since June 2013.
The SpaceX investment was followed up by news that it would be participating in what is called a Mobile Virtual Network Operator agreement with Sprint and T-Mobile. MVNO, the model for companies like Metro PCS and Cricket Wireless whereby network infrastructure is rented from a “Big Four” carrier (Verizon, AT&T, Sprint, T-Mobile), would make Google a wireless carrier.
Becoming a service provider is a natural extension of Google’s mobile ambitions. Android, the operating system Google developed, powers over half of the smartphones purchased in the United States, while the Nexus phone, manufactured by partners like LG and Motorola, is branded under the Google name.
However, like the SpaceX investment, becoming an MVNO is ultimately about growing the number of people who use the Internet (and Google as its portal). According to a report from The Information, which originally broke the news, Google is looking to undercut even discount wireless providers through a suite of low-cost communications applications based on existing technology like Google Voice.
While the payoffs of such wide reaching initiatives aren’t likely to come for some time, investors have expressed confidence in the decision-making. Stock in Google is up 7.27% over the past five days.
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