Google Nexus One smartphone no threat to wireless business model

Jessica Scarpati
14 Jan 2010

Although Google is selling its much-anticipated Nexus One smartphone directly to consumers, the tactic is unlikely to break up the wireless business model of carrier-device monogamy in the US.

"Operators, whether Google wants to admit it or not … have control in the US, and they probably will for some time," said Allen Nogee, principal analyst at In-Stat. "They have control not only because of pricing and subsidization but … because they all use different frequencies and they all use different technologies."

For starters, blame “the fairly limited spectrum" in the US for that, Nogee said. Nexus One, which runs on Google's Android operating system and HTC Corp.'s hardware, was built to function at 3G speeds in the US on the AWS 1700/2100 MHz frequency band -- the spectrum T-Mobile USA uses for its 3G network.

Verizon Wireless, AT&T and Sprint all use the 1900 MHz band for their 3G networks, and the Nexus One is incompatible with this band. But AT&T and the Google Nexus One smartphone share a 2G frequency -- 850 MHz via Global System for Mobile communication (GSM) -- which enables voice calls but nullifies the smartphone's true draw -- data.

Meanwhile, buying the unlocked or carrier-neutral Nexus One comes at a steep price of $529 when purchased directly from Google. A two-year T-Mobile contract cuts that down to $179 -- about one third of the original price -- and guarantees the phone will work on its network.

“Google is highlighting the fact that you can buy the Nexus One unlocked, but it won't do US residents all that much good,” wrote Avi Greengart, a research director at Current Analysis, in a research note. “For all intents and purposes, it is a T-Mobile-specific phone.”

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