Google patent puts the squeeze on mobile carriers

Surprise T-Mobile and any other carrier looking to support phones based on Google's new Android operating system. All those new customers you thought you were getting won't actually be yours alone. You'll have to share them--on a minute by minute basis--with all the other carriers out there, severely limiting the payback you expected on all your 3G network investments. You and the networks you run will quickly become commoditized, while application providers (like Google) get better service, more customers and rake in all the dough. At least that's the future envisioned by Google, as outlined in a recently posted patent application.

Google's March 2007 patent is for a system, modeled on Google's Adwords, that gets mobile operators to compete via auction for the chance to provide users with service. Users can then set their smartphones to automatically switch carriers, perhaps several times a day, to get the best rate or better bandwidth--all without being hit with onerous service fees or switching costs.

Sounds great for users and Google, but it's difficult to envision the mobile carriers playing along. Why should everyone else reap the benefits of their network investments, while the carriers are stuck competing for customers on razor-thin margins? Maybe the providers with the fastest networks and best coverage will win out for a while, but eventually, the networks will become commoditized--and all the carriers will lose.

While the main promise of Android is its openness, the ability to let consumers pick and choose applications, and especially to buy a phone and then choose the service provider that suits them best, the patent's view of openness--on a minute by minute basis--is a bit too brutal. And the fact that T-Mobile, the first carrier for an Android phone, has SIM-locked it to its network shows that Google will have an uphill battle to fight to get carrier buy-in. In the end, it comes down to who has the most muscle: Google/users or the carriers?