Piper Jaffray: Real Motive For Google To Enter Wireless Space Is To Be A 'Stalking Horse'

Google Inc GOOGL GOOG recently announced that it will be entering the wireless space, albeit on a smaller scale than mobile carriers. Piper Jaffray Analyst Gene Munster was on CNBC Wednesday to discuss how Google's entry will change the space and its impact on consumers.

The Real Motivation

"Their stated motivation is to create a small network that will allow them to test innovation around mobile and Android and not to compete with Verizon and AT&T," Munster said. "But probably the real motive here is to be a stalking horse, to basically encourage or twist the arm of the existing carriers to offer cheaper data, because when you use more data like YouTube on your mobile phone or any sort of internet, Google benefits. And so I think there's a stated goal and then the real goal."

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The Positive For Shareholders

Munster was asked how does this decision by Google plays out for shareholder. He said, "From a shareholder perspective this makes a ton of sense and the reason is more data usage is good for Google. About half of the spending online -- advertising spending online -- is done through Google."

" So they capture broad wrath of when people spend their time online, Google tends to benefit and so as an investor in Google as they encourage more internet usage that clearly benefits their business."

The Negative For Shareholders

"There is one small negative wildcard that if they do want to promote this service," Munster remarked, "there's going to be some expenses associated with it. Actually building a service doesn't cost so much money, they license spectrum from existing carriers. But the marketing of it may cost them a little bit of money which may weigh on the margin slightly in the near-term."