Both Sprint and T-Mobile have to build physical infrasture, both to offer basic services (e.g. 3G, talk/text) but to also compete (4G, LTE, etc). Building infrastructure is really expensive. They need land, licences, power, and a network to connect that tower to (assuming it isn't just a relay).
So both networks have this HUGE sunk cost. In an ideal world they would be able to recruit enough users to consume each tower's capacity by 100% at peak. But because they're competing against other networks (with more users) and have to look competitive, they've over-built their network both in scope (e.g. servicing areas with few users) and capacity.
If Sprint and T-Mobile were confident that they could recruit enough users to fill their network they likely wouldn't agree to this deal. Just as AT&T and Verizon haven't. However the likely reality is that both Sprint and T-Mobile are well over capacity in certain areas and every penny that Google can bring in by stealing uses from the big two is just further helps Sprint and T-mobile, even if they just use it to further build out their respective networks.
Additionally: You could frame this as an "illusion of choice." You have Walmart/Target Cellular (Straight Talk/Brightspot) on the low end, T-Mobile themselves in the middle, and Google's Project Fi offering a niche service, but in reality they're all just T-Mobile aimed at a different user base. In all three cases T-Mobile grows, their network grows, and they could kick these brands off any time the contract is up for renew.
PS - T-Mobile actually host just under 30(!) different cellular providers in the US[0]
[0] https://en.wikipedia.org/wiki/List_of_United_States_mobile_v...
Meanwhile hardware and network owners madly fight to stay relevant, like the aggressive customization of Samsung's android Touchwiz or the various telecoms lobbying against net neutrality.
The era of multi-year contracts and heavy device subsidies has primarily helped those with large market share maintain it. T-mobile in particular has been pushing to change how the market works and bring an end to some of the ways that customers have been locked in to carriers. I wouldn't be to surprised to seem them support further commoditization.
Instead what's going to happen, T-Mobile and Sprint both agree to offer the same performance, or focus on different regions.
It's like selling slices of pizza on the street. If you're smart, you and your competitor agree to sell at $5/slice. If you drop to $4, sure you'll get more customers for a short period of time, but then your competitor drops to $4, and now you both just cut 20% off your revenue for no reason.
http://en.wikipedia.org/wiki/United_States_2008_wireless_spe...
I could see how it could be an attractive revenue stream.
To Sprint and T-Mobile, Google is just another MVNO carrier.
Most MVNOs are just resellers of a single network. They may migrate users between networks as contracts expire, but dynamically balancing between multiple networks is less common. I'm sure many people have thought of this idea before (Apple included) but actually getting multiple carriers to agree to a deal is what's interesting about this.
It's also probable only recently feasible with a mass market phone that can handle all the difference frequencies (and potentially different network types) involved.
My other theory is that they are giving Google a taste of the business that will later lead to Google buying T-Mobile or Sprint outright.
For those in the know: how much would they get per subscriber, assuming $20 for the "basics" as they call it, and $10 per Gig for data?
This is likely difficult to calculate, given they are using both T-Mobile _and_ Sprint, and they refund unused data. But I'd be curious nevertheless...
This plan enables people to be 'more online' while mobile, even in other countries.
Google has always been trying to lower the barriers to the internet (slow javascript -> Chrome (v8 engine), the internet baloons in africa, and now a global cellular/mobile internet service at decent rates).
T-Mobile site says 1 GB of 4G data with unlimited talk and text for $50 a month.
5 gigs of 4G data is $70
If you scroll down, there's:
$30 per month — Unlimited web and text with 100 minutes talk 100 minutes talk | Unlimited text | First 5GB at up to 4G speeds
I'm considering switch from that plan to Google Fi for Canada data.
There are some cheaper pay-as-you-go plans, but those are actually Walmart's plans using T-Mobile's towers—similar to what Google is doing here.
* T-Mobile customer service is inconsistent in messaging on the phone, via Facebook, stores
* As a H1B visa holder I am, according to TMO, not able to get a postpaid plan
* Prepaid plan does not work outside of the US
* Prepaid plan has issues receiving short codes from Uber/Bank of America and possibly others - I've spent 8+ hours trying to get it resolved and just ended up giving up.
* I currently use Cricket, due to the 20GB max, but the network is so incredibly slow that it's almost pointless. In NYC I often get at most 100kb/s downstream, when on LTE; that's just no good.
* Spam calls to my Cricket number, and they are unable to do anything about the multiple calls I receive a day
* I use Google Voice already, and it's incredible - except for international texting which they have crappy support for.
* Google Voice has issues with short codes, kinda like TMO prepaid.
Assuming the latter two has been solved with Project Fi + I can get proper network speeds + they filter out spam + automatic transcripts of voicemails (latter two being Google Voice features), then I'm a fan. Can't wait to get it for my Nexus 6.
-citation: I confounded and run a U.S. MVNO.
What? I'm on a TN and I have a postpaid plan and device payment plan. Your visa status doesn't really affect your phone plan eligibility.
However, H1B holders are people having recently arrived to the US, and therefore with 0 credit history. This is what impacts the capability to get a postpaid plan, but after a few months to build it up there should be no problem.
Personally, I find it ridiculous. Having money in the bank as well as a good salary, and not being able to sign up for a 30$ monthly plan; or applying for a credit card and getting either rejected or one with a 200$ credit limit.
AT&T will let you sign up for a post-paid without a credit history. I didn't want to provide a SSN (even though I have one), so they let me pay an $800 deposit fee - was worth it to avoid the personal information exposure.
The credit card thing is strange - I got a $20,000 one with wells fargo the month after I moved down to the united states in 1996 - on a $50,000 salary working desktop support. I was quite honestly a little shocked - but just went with it.
Well, if history proves anything is that most of their investors will prefer an immediate cash-in that will raise the results and the stock price, over the long-term sustainability of the company.
Let ye olde business do the infrastructure, and Google - data mining.
Presumably Google is paying them something to compensate for that, but it still seems dumb -- accepting a little money today at the cost of cutting your own throat in the long term. But then there aren't many providers in the US that aren't dumb, so maybe the long-term threat has just been completely missed by them? Who knows...