×

Google Is the Last Thing the Wireless Carriers Need

Models display Samsung Electronics Co. Galaxy Nexus smartphones, running Google Inc.'s Ice Cream Sandwich Android operating system.
Jerome Favre | Bloomberg | Getty Images
Models display Samsung Electronics Co. Galaxy Nexus smartphones, running Google Inc.'s Ice Cream Sandwich Android operating system.

As if the wireless carrier industry wasn't doing a good enough job of driving prices and its business into the ground — now Google may be here to speed up the process.

The Information reported this week that Google is expected to tap the networks of Sprint and T-Mobile to create a Mobile Virtual Network Operator (MVNO) and essentially offer cell service under its own brand.

The two carriers might enjoy a short-term boost in revenue and traffic from the Internet giant, but they may also have let a brand new deep-pocketed competitor into the cutthroat business of stealing each others wireless customers.

Both Sprint and T-Mobile are leading the U.S. wireless business in trying to snatch customers from larger rivals AT&T and Verizon by offering ever sweeter deals. Just this week, Tim Hoettges, CEO of Deutsche Telekom, the majority owner of T-Mobile U.S., told Re/code the business was simply unsustainable in the long term without greater scale.

Read more from Re/code:

FTC Alleges T-Mobile Made Millions From Allegedly Bogus Text Message Charges
Google's Regina Dugan Explains Why the World Needs a Modular Smartphone
Wireless Carriers' Bidding Tops $36 Billion in FCC Auction For Airwaves

Google likely cares little about being in the business of offering wireless service for its own sake. But as a company that generates new business from people accessing content, its interest is in driving the cost of network access as low as possible while encouraging the service providers to improve their networks. That's why Google has entered the business of offering high-speed broadband to the home with Google Fiber.

If it were simply out to drive prices lower, why bother acting at all? The industry is already doing a fine job of setting its business on fire.

Is Google trying to find a way to get the latest Android smartphone operating system releases into the hands of users more quickly? Wading into the murky business of serving cellphone consumers would be an inefficient way to do so. It is also unlikely Google is aiming to take the existing carriers head-on, at least not for the average consumer.

Read MoreCompetition heats up for Google, Amazon and Netflix

Perhaps Google is exploring an alternative type of network that relies mostly on Wi-Fi, meaning it would only have to pay Sprint or T-Mobile for the service not covered by Wi-Fi. That's the approach taken by Republic Wireless, which has a deal with Sprint for coverage when customers don't have Wi-Fi. Republic has made rather modest inroads, but Google clearly has more resources at its disposal.

Even with all those resources, though, Google could find being in the cell service market harder than expected. Historically, MVNOs have had a tough time, with the most successful ones targeting market niches. America Movil's Tracfone, for example, targets the low end of the market and buys capacity from several of the major cellphone networks. Brands like Walt Disney got into the business early, but exited after finding customers preferred to get their cell service from a traditional provider.

And while T-Mobile and Sprint may feel the pressure to do a deal with Google if one believed the other was doing so, they also have the responsibility to make sure they are not digging their own graves even faster.

Read MoreAT&T CEO: This is the most important issue for us

CNBC's parent NBCUniversal is an investor in Re/code's parent Revere Digital, and the companies have a content-sharing arrangement.