How Google's wireless service could push down everyone's cellphone bill

Google is getting into the wireless business, a company executive admitted last week. That might mean cheaper wireless service for all of us.

Google isn't building its own cellular towers — that would be way too expensive. Instead, Google will purchase capacity from other wireless carriers and resell it as a Google-branded service. The new service might launch before the end of the month.

By seamlessly combining expensive cellular service with cheap wifi, Google is expected to offer a service that's a lot cheaper than conventional wireless plans. Google wouldn't be the first to use this technique — it was pioneered by a startup called Republic Wireless — but a Google service would help to push the concept into the mainstream. And that will put pressure on wireless providers to cut their prices.

Google wants to put pressure on other wireless providers

Google, state, and city officials gathered at the Provo Convention Center to announce that the city has been chosen as the third city in the country to get Google Fiber on April 17, 2013. (George Frey/Getty Images)

The wireless project bears some similarities to Google Fiber, the effort to build a super-fast fiber optic network in Kansas City — and later other metropolitan areas. When the Google Fiber project was launched about five years ago, it helped to highlight how far behind the curve incumbent phone and cable companies had fallen.

When it launched, that network was 10 to 50 times faster than service available in other parts of the country. Building it pressured broadband providers across the country to upgrade their networks, which made Google products — especially the bandwidth-hungry YouTube — work better.

Google may be trying to do something similar in the wireless market. The two biggest wireless providers, AT&T and Verizon, have been charging high prices for plans that limit how much data users can download. If Google is able to offer a cheaper service, it would pressure conventional wireless providers to offer cheaper plans with fewer restrictions. That can only help Google's many online services. And it would be good for consumers, too.

Google doesn't have to win to win

(hon ning tse / Getty)

Google's goal here probably isn't to dominate the wireless industry. That would be too expensive even for the deep-pocketed search giant. Building a wireless network from scratch requires constructing thousands of cellular towers and buying billions of dollars' worth of electromagnetic spectrum. These high costs are a big reason there are only four national wireless carriers: AT&T, Verizon, Sprint, and T-Mobile.

Instead, Google is planning to become a mobile virtual network operator (MVNO). That's a company that resells other companies' wireless service under its own brand. Examples of existing MVNOs include Boost Mobile, Cricket Wireless, and Virgin Mobile. From the customer's perspective, the distinction between MVNOs and conventional carriers doesn't matter very much. Many customers won't even realize that Google is reselling service from other companies.

According to the Wall Street Journal, Google is planning to partner with Sprint and T-Mobile, the two smallest of the nation's four wireless providers.

A wifi-first approach can save a ton of money

(John Moore/Getty Images)

So why jump into the wireless business? It looks like Google's plan is to save money by helping people use cheap wifi networks more — and expensive cellular networks less.

Wifi equipment is so cheap and user-friendly that anyone can set up a wifi network for their home or office. But most cellphones aren't set up to take full advantage of these potential savings. Switching from a wifi network to a cellular network in the middle of making a phone call or browsing the web causes dropped connections. As a result, our smartphones consume a lot of expensive cellular bandwidth when they could be using cheaper wifi service instead.

In 2011, a startup called Republic Wireless launched a new service designed to use wifi networks more efficiently. Today, the company offers unlimited talk, text, and data for $40 per month using a high-speed 4G network. Or, if you can live with the slower speeds of older 3G networking technology, you can get unlimited talk, text, and data for $25 per month. That's two to four times less than the cost of a conventional wireless plan.

Republic Wireless's service only works with Android-based Motorola phones that Republic has customized to support seamless switching between wifi and cellular networks. The Wall Street Journal reports that Google's service will have a similar limitation: it will only work with the Nexus 6, a phone that's also made by Motorola.

According to the Journal, Google "expects to launch the service in coming weeks, but the start may be delayed."

Correction: This article originally stated that Motorola was a Google subsidiary, but the unit was sold to Lenovo in late 2014.

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