Is Alphabet's (GOOG -0.67%) (GOOGL -0.79%) Google considering collaborating with DISH Network (DISH) to enter the wireless telecom space? Reports say yes, but Google says no. A Google spokesman told The New York Post that reports of wireless network discussions were "simply false," though he did not comment on reported meetings between Alphabet director Alan Mulally and DISH execs.
It's far from clear that a Google and DISH will team up on such a project, but it's an interesting idea. Would this type of project make sense for Google? What about DISH?
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Google's intriguing opportunity
Despite Google's emphatic denial, there are reasons to think that Google should enter the wireless network space.
For starters, Google is technically already here. Google's Google Fi service already serves up wireless connectivity to customers. It's a relatively small player in its space, though: Google leases its wireless spectrum from telecoms T-Mobile US (TMUS 1.50%), Sprint (S), and United States Cellular.
It's not too surprising to see Google in this space, because Google is in a lot of business spaces. And if there's one thing that virtually all of those Google products and services have in common, it's internet connectivity. From Google's cloud computing business to regular old Google.com, Google needs the internet. And mobile connectivity has become a more and more important part of the internet in recent years. The Pew Research Center reported this year that 37% of Americans say they use the internet "mostly" on their smartphones -- way up from the 19% figure Pew found in 2013.
Even more strikingly, mobile connections are increasingly competing with broadband infrastructure. Pew found that 45% of households without broadband cited their mobile device and mobile network as a major reason for not having broadband. Mobile connections present a particularly compelling alternative to traditional internet in areas underserved by broadband infrastructure. If Google wants products like its Stadia cloud gaming platform to catch on in areas without speedy broadband internet, it could play a more active role in making that happen by providing speedy internet via a mobile network.
Google's services use the internet. It would make sense for Google to want to control the connectivity it needs; that's part of what made Google Fiber such a sensible extension of Google's businesses, and the same logic applies to wireless connectivity.
On the other hand, Google Fiber has not been an unqualified success (though Google is investing in it in a big way this year). And Google isn't necessarily under much pressure to get a wireless-network deal done fast. The same can't be said of DISH.
DISH's sense of urgency
The case for DISH's interest in this hypothetical partnership is much more straightforward. For DISH, an entry into the mobile carrier space makes a lot of sense.
There are already major companies in this space, of course, but one of them would actually be likely to help DISH get involved. T-Mobile is in the middle of a huge merger with Sprint, one that has been plagued by regulatory scrutiny and legal challenges. The Department of Justice is reportedly pressuring T-Mobile to aid a project like this in order to get approval for the Sprint merger. DISH has been widely reported to be the likely buyer of Sprint's Boost Mobile, as well as wireless spectrum that both T-Mobile and Sprint are expected to divest in order to clear the way for regulatory approval.
And then there's the spectrum that DISH already has. DISH is in danger of losing airwave licenses it bought years ago. The company has asked the Federal Communications Commission to waive a March "use it or lose it" deadline, so it can acquire assets from T-Mobile and launch a wireless carrier that uses the spectrum it owns. For DISH, the clock is ticking.
An intriguing potential partnership
DISH is desperate to enter the wireless-carrier space. Google is much less so -- but it ought to strongly consider the move. As the already important wireless networks continue to claim larger and larger portions of internet connectivity and app usage, it makes sense for tech companies to try to enter the wireless-network business.
For proof that Google should consider this strategy, look no further than the reaction of other companies: Deutsche Telekom, T-Mobile's German parent company, is reportedly against the move. Google has a chance to frustrate old tech rivals and new telecom rivals at once, and that's a good indicator of the upside of this idea.
