Verizon and AT&T no-shows at the Google party

November 6, 2007, 11:24 AM UTC

By Michal Lev-Ram

Google’s Open Handset Alliance — an open-source mobile operating platform unveiled earlier Monday — has managed to attract a star-studded lineup of companies including T-Mobile, Qualcomm (QCOM), Motorola (MOT), Sprint (S), LG and China Mobile. But glaringly absent from the ‘Axis of Google’ are the two largest U.S. carriers: AT&T (T) and Verizon Wireless (VZ).

According to analysts, the two carriers have several reasons for not rushing into an agreement with Google — a company whose ‘open’ ideals they haven’t always agreed with. For one, Google (GOOG) has said it plans to bid on upcoming wireless spectrum that will soon be up for auction by the Federal Communications Commission, which has led to speculations the Mountain View, Calif.-based search giant could someday become a mobile operator and go head to head with AT&T and Verizon.

“They could be worried that after embracing Google’s technology they would end up competing with them as a carrier at some point down the road,” says Michael Gartenberg, an analyst with Jupiter Research, though he adds it’s unlikely Google will become a wireless operator anytime soon.

There are other possible reasons why AT&T and Verizon haven’t jumped on the bandwagon quite yet, the most obvious of which that, as the two largest carriers in the United States, they can afford to wait it out and let other companies be Google’s guinea pigs.

T-Mobile and Sprint, on the other hand, have much to gain by joining the alliance this early in the game, as both are trying to differentiate themselves in the wireless market.

T-Mobile in particular is a hands-on member of the alliance, and is expected to sell the first phone to run on Google’s new platform in the second half of 2008. Cole Broadman, T-Mobile’s chief development officer, says that it’s very likely other carriers will join the alliance at some point.

But so far, both AT&T and Verizon aren’t saying if they’ll sign up. However, if the Open Handset Alliance becomes the game-changer Google hopes it will, the top two U.S. carriers won’t be able to hold out for too much longer.

“Some folks will want to hold off and join later rather than sooner,” says Gartenberg. “But you can be sure every carrier will be looking at this thing very closely, and if and when there’s any traction they’ll quick jump on board.”

For now, it’s clear AT&T and Verizon are taking the wait-and-see approach. And they’re probably not the only ones: Also missing from the Google alliance roster was iPhone maker Apple (AAPL). Still, the 33 mostly mobile-centric companies Google managed to line up for Monday’s announcement was most likely just a harbinger of what’s to come.

“Very few companies have the breadth and depth and gravitas to put this kind of alliance together,” says Gartenberg. “But this is just their first shot. I wouldn’t look at this announcement as a final list of what will eventually come to market.”