Project Fi's winners and losers

Winners: frequent international travelers; losers: small wireless companies

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A wireless industry disruption

While an AT&T official downplayed Project Fi as a niche idea, others see it as potentially disruptive in challenging rates and service approaches.

Menezes said that if the network-sharing features work well for Project Fi, both T-Mobile and Sprint may decide to extend a similar capability to their own postpaid customers.

As the major carriers have adapted pricing and no-contract approaches to T-Mobile's disruptions over the past year, Google could do the same.

"Google is not trying to take over the wireless market, nor do the major cellular carriers have anything to fear," said Jack Gold, an analyst at J. Gold Associates.

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Google's Nexus 6

"Google is just trying to shake up the market, just as they did with Google Fiber in Kansas City, with Nexus phones when they thought no one was making a good enough phone, and with Google Voice. They are basically having a trial to see if the switching technology between Wi-Fi and cellular works as stated, something that people have been trying to do between networks for years with mixed results." T-Mobile offers connections from cellular to Wi-Fi, but the process is not automatic, Gold said.

If Google is successful, other carriers might have to respond. "But I don't expect them to start offering $20 cellular plans anytime soon," Gold said of the competitors.

Entner put it this way: "Google is trying to change the shape of the wireless industry with a relatively modest effort."

Potential losers and a laundry list of concerns

In addition to whether Project Fi can successfully transfer connections from Wi-Fi to cellular with its unnamed innovative technology, there are other concerns.

The first is coverage. Google won't even invite users to join Project Fi's Early Access Program if they live outside of network coverage areas.

Google's coverage map includes nearly all of the U.S., plus parts of Canada and Mexico. In the vast area west of Kansas, there is sparse LTE coverage and mostly 2G and some 3G cellular service. Montana is almost devoid of any coverage at all, at least for cellular. (But Google might have a trick up its sleeve with various low-altitude balloons or the use of low frequency spectrum.)

The plan also only works with the Nexus 6 smartphone. Google will eventually need to move beyond a single handset if Project Fi is expected to advance beyond the project phase.

"The impact of Project Fi will be minimal given the link to Nexus 6," Milanesi said. She noted that buying a Nexus 6 for $27 a month for two years, plus $30 a month for service and data, "doesn't sound bad on paper, but with the new plans from T-Mobile and AT&T, you have similar options with a broader choice of devices."

Still, it's clear that Google wants to test its Project Fi idea carefully. "In the beginning, when you launch something like this, it's important to limit the number of moving parts to be able to find out more quickly what the real problem is should trouble arise," Entner said.

By using a single device, it will be easier to introduce new "nifty" services and software. "They will come up with things we haven't thought of," Entner said.

However, Milanesi said if Google wants to move beyond the project phase, it will need other phone models to "show how serious Google is to make this a mass market service versus an experiment."

Another concern are the the Invites and Early Access. Even if a Google fan gets into the Early Access Program for Project Fi, it's possible that after a few years, Google could pull back and decide not to proceed. As with Google Glass, the wearable technology that may be resurrected someday, there could be a degree of uncertainty on the minds of many users.

"It's a possibility users would be left in limbo, like Google Glass," Entner said. He recalled that Google launched Goog-411, a speech-recognition-based business directory search, in 2007, only to abandon it in 2010. Google later admitted it used the service to gather a large database of voice sounds to be able to improve its speech recognition engine.

"I don't know what Google expects to get from a beta user base except more data on how well the service works and how well the Sprint and T-Mobile handovers go," Menezes added.

Loser: Small carriers

While Project Fi is sure to stir up interest, Google's success is bound to hurt smaller carriers, including those that operate over both Wi-Fi and cellular but don't have the name recognition, cash and mammoth size of Google.

"Overall, I think Project Fi is a positive and any new innovation is positive for the market," Entner said. "It shows how open the market is that you have something like a Google offer a differentiated wireless service."

But, he added, "the small guys will suffer the most – the Republics and the Tings. Google is like WalMart coming to town. It's not Kroger or Stop & Shop that suffers, it's the mom and pop stores that will die."

According to its website, Republic Wireless offers phones that work on both Wi-Fi and cellular, and the carrier commits to offering phones that are optimized to use Wi-Fi.

Ting began wireless service in 2012, and in March it became the first North American carrier to offer shared usage over both GSM and CDMA. It also launched gigabit fiber services in Charlottesville, Va., in April.

A final concern is customer service. Google has experience at customer service with its Google Fiber launches in the Kansas City and Austin areas, but customer service could be Project Fi's biggest hurdle.

"Customer service is one of the most maligned parts of wireless service and it's extremely difficult," Entner said. "To see how Google solves the customer service problem will be very, very interesting. I can just imagine a service call to Project Fi where the customer starts asking about all the things Google already does, like how to use Google Search or Hangouts."

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Copyright © 2015 IDG Communications, Inc.

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