Move over Project Glass and Project Loon. Project Fi has arrived, and with it, Google (NASDAQ: GOOGL) is going to change the cellular industry forever.
Yes, that’s right, Google is going to offer its own wireless service to consumers. Seeking to shake up the status quo of a wireless industry dominated by Verizon (NYSE: VZ) and AT&T (NYSE: T), I expect the Google wireless service dubbed “Project Fi” to be an overnight game changer.
By buying wholesale broadband from Sprint (NYSE: S) and T-Mobile (NYSE: TMUS), Google will essentially operate its own wireless service provider. Anywhere that a Sprint or T-Mobile phone works today, a Google Fi phone will work when the service is up and running.
Interestingly, this is pretty similar to what Apple (NASDAQ: AAPL) considered when it was launching the iPhone. In the end, Apple chose to partner with AT&T as its exclusive service provider, rather than to create its own network. Clearly, Google decided the move was right for the company, perhaps because Sprint and T-Mobile coverage is better than it was before.
At the very least, I expect Project Fi to eventually force the rest of the market – including Verizon Wireless, AT&T, Sprint and T-Mobile – to adopt a pricing scheme similar to how Google will charge customers for Google Fi service.
For just $20, users will get unlimited talk, text, mobile hotspot and international coverage. Data will cost $10 per gigabyte.
The best part? Google will refund customers for unused data. You paid $30 for 3 GB but only used 1.6 GB? Google will refund you $14 for the unused data.
The service is limited to one Google phone – the Nexus 6 – and is only available in certain parts of the U.S. by invitation only, at least for now. Many see the partnership with Sprint and T-Mobile as a drawback as well, since Verizon and AT&T are generally regarded to have significantly better coverage.
The move will likely force Verizon and AT&T to introduce more user-friendly pricing models. More importantly, I expect Apple to eventually offer the same type of service. Today, Apple has its own hardware, software, payments system, smartwatch, headphones and music service. Providing its own wireless network would give Apple even more control over the user experience, not to mention more of the profits.
If you currently pay for an expensive smartphone data plan, I’m guessing that the Google wireless announcement is welcome news. With such high-profile disruption from Google, I have no doubt that the other major providers will have to respond in ways that benefit users.
Plus, wireless service providers receive notoriously low customer service ratings, with Verizon Wireless and T-Mobile tied for the industry lead at 45% satisfaction, according to Temkin Ratings.
Not only is the Google wireless service going to change the way wireless service providers price their plans, I fully expect Apple to follow suit.
DISCLOSURE: I personally own shares of Apple.
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