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Why Google's really getting into wireless: Analyst

Why Google's really getting into wireless: Analyst

Google (NASDAQ: GOOGL)'s big announcement this week about becoming a wireless carrier was less about competing with the likes of Verizon (NYSE: VZ) and AT&T (NYSE: T) and more about driving down the costs of wireless data, according to Piper Jaffray tech analyst Gene Munster.

The search giant announced its plan to experiment with wireless services in the next few months at the Mobile World Congress in Barcelona, Spain. Rumors that Google might offer wireless service along with Android phones surfaced earlier this year, but the company didn't confirm those rumors until this week.

In a note published Tuesday, Munster said: "At the end of the day, Google does not want to be a wireless carrier. The wireless strategy feels like Google is trying to put pressure on AT&T, Verizon, Sprint (NYSE: S) and T-Mobile (NYSE: TMUS) to offer low-cost unlimited data to the consumer. Google benefits from unlimited wireless data because people will use their phones more, and more Internet use is good for Google, especially with mobile YouTube."

The rollout of Google's wireless service is "probably going to be in the next six months," Munster told CNBC. And while it will likely be limited to small markets at first, the impact of Google's plan could benefit customers of other wireless carriers in the next year, he said.

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While Google will likely spend money to promote its wireless service, if it ends up boosting Internet usage, it stands to benefit from an increase in advertising revenue, according to Munster.

"Most investors view Google as a story without a catalyst. We believe there are two catalysts in 2015," Munster wrote in the note. "First, the resolution of the Safari deal and, second, the possibility for [costs per click] turning positive in December 2015 for the first time since September of 2011."

Read More Billions at stake on Apple-Google search deal

The deal between Apple (NASDAQ: AAPL) and Google that makes Google the default search tool in Apple's Safari browsers is reportedly up for renewal this year.

For Google, costs per click refers to the amount of revenue the company receives every time a user clicks on an ad.



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