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Tuesday, March 19, 2024
March 19, 2024

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Google’s Project Fi a game changer?

The Columbian
Published:

MOUNTAIN VIEW, Calif. — Google waded into the wireless business last week, introducing a service called Project Fi that champions better connectivity and lower rates for mobile-phone users in the United States, even if it won’t make much money.

Google’s most intriguing innovation is what it calls its “network of networks” enabling phones to automatically tap into the strongest signal, be it a free Wi-Fi hotspot or the cellular towers of the two carriers, Sprint and T-Mobile, that Google has partnered with in a bid to challenge behemoth carriers Verizon and AT&T.

That technological advancement — and Google’s pricing plan, which pays users back for data they don’t use — could spark long-term improvements in wireless service but probably won’t upend the industry.

“Google’s angle seems more aimed at driving change than dollars,” said Colby Synesael, an analyst for Cowen and Co.

He said Project Fi’s greatest impact — and Google’s likely intent — will be that “other carriers will start to mimic certain aspects of the service.”

Those services include automatically connecting to about a million free Wi-Fi hotspots, encrypting calls, making phone numbers “cloud-based” so they can be used on any Internet-connected device and allowing customers to make Wi-Fi voice calls.

Among the new service’s most enthusiastic boosters was one of Google’s partners, T-Mobile chief executive John Legere, who wrote in a blog post that “anything that shakes up the industry status quo is a good thing.”

“The carriers have dug in their heels and held U.S. wireless back for too long,” Legere wrote. “This industry needs all the fresh blood and fresh thinking it can get.”

But Project Fi will be available only on Google’s Nexus 6 smartphone, a limitation that hampers its effect on the wireless marketplace.

“For now, you have to have a $649 Nexus 6, which I think will keep a lot of people from using it,” said Derek Turner, research director at consumer advocacy group Free Press.

But Google also has a reputation for transforming small-scale experiments into industry-altering advancements. Its high-speed Internet business, Google Fiber, had a clunky start but propelled enough consumer excitement to scare rivals such as Comcast into introducing faster connections.

AT&T’s chief financial officer, John Stephens, shrugged aside any concerns AT&T’s shareholders might have when asked about Project Fi during an earnings call Wednesday.

“I understand it’s got a very limited number of devices,” which is not how AT&T approaches new ventures, he said. Verizon’s chief financial officer made similar comments and called Google “just another carrier” when rumors of the planned wireless service emerged earlier this year.

The number of Americans who carry the Nexus 6 phone is “minuscule,” less than 1 percent of all Android smartphones sold, according to Stephen Baker, vice president of industry analysis at The NPD Group, based in New York.

That makes Project Fi more of an experiment than a real business venture, he said.

“It’s a really small impact,” Baker said. “It’s a demonstration of what people can do, what the technology can do, as opposed to a new business that’s going to undercut the carriers.”

By making deals with Sprint and T-Mobile, Google has become what’s known as a mobile virtual network operator that will sell the wireless service it buys from the carriers. Project Fi’s plan will cost $20 for basic voice and texting and an additional $10 for every gigabyte of data. At the end of a month, customers who don’t use all that data get a refund for what they didn’t use — a sharp move away from the unlimited plans that have become the norm.

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