Project Fi's winners and losers

Project Fi, Google's Wi-Fi and cellular network service announced Wednesday, can variously be described as low-cost, disruptive, cutting edge, tantalizing, confusing, even awesome.

Google is offering the lowest entry-level wireless price plan in the U.S. at $30 a month. That sum includes $20 for talk, text, Wi-Fi tethering and international coverage in 120 countries plus $10 for 1 GB of data. The plan adds $10 a month for each additional 1 GB of data thereafter. Google is partnering with Sprint and T-Mobile for the cellular service.

One big drawback is that the service, so far, is described as a "project" that is invitation-only for select users who join an Early Access Program. The plan also requires a Nexus 6 smartphone, which went on sale in October for $649. Those invited also must live in a zip code where Project Fi has coverage.

To be sure, there are potential plums with Project Fi. The biggest winners, according to analysts, will be entry-level smartphone users, frequent international business travelers and anyone who loves technology innovation and disruption, and in the wireless industry in particular.

There could be downsides as well. Users could face gaps in wireless coverage or less-than-smooth handoffs between Wi-Fi and the cellular networks of either Sprint or T-Mobile. Google customer service could be shoddy. Small wireless companies could be threatened. Google could ultimately decide to back off Project Fi, similar to what's happened with Google Glass.

Here's a rundown of winners and potential losers.

Winner: Entry-level, low-data smartphone users

The biggest pricing advantage with Project Fi goes to single individuals who are light users of data. The plan will likely be $15 to $20 cheaper than many competing offers from major carriers. (Computerworld blogger JR Raphael shows price advantages for Project Fi in 10 different comparisons with some of the major U.S. carriers' plans.)

Average data consumption in the U.S. is 2 GB to 2.5 GB per month. "The moment you use more than 4 GB of data, you are better off at Sprint, and if you use more than 5 GB per month, you are better off being on T-Mobile," said Roger Entner, an analyst at Recon Analytics.

Bill Menezes, an analyst at Gartner, agreed. "This plan is clearly aimed at lower-usage customers who are paying greater than $10 per gigabyte for what they use," he said.

Using Entner's analysis, 4 GB on Project Fi would cost $40, plus the $20 monthly fee for voice and other services, for a total of $60. Sprint offers an unlimited data plan for $60 a month that includes talk, text and data. With the iPhone 6 or 6 Plus, the price drops to $50 a month.

For 5GB of data on Project Fi with talk and text, the total would be $70, which is a tie with what T-Mobile offers for talk, text and 5 GB. But T-Mobile also has an unlimited plan for talk, text and data at $80 a month.

What's interesting about Project Fi is that both the cellular carriers working with Google have unlimited plans, while Project Fi does not. "It's very interesting that Project Fi is not unlimited, which is Google's tacit admission that no matter how much the public wants it, bandwidth costs money," Entner said.

Menezes used his own experience as a T-Mobile customer to note that he and his wife have two unlimited voice, data and text lines for $100 a month. In a recent month, he paid his half-- $50-- for use of 4 GB of data and unlimited voice and text, which would have compared to $60 on Project Fi.

He also noted that volume discounts for data on both AT&T and Verizon can drop to below $10 per gigabyte. (Example: Two smartphones on the AT&T Mobile Share Value plan with 10 GB of shared data is $130 a month, while Project Fi would cost $140 a month.)

Winner: Frequent international travelers

Some of the major U.S. carriers can't compete with Project Fi on international wireless voice and data services.

Google's plan offers international coverage in 120 countries, and it's included in the same $10 per GB of data users pay for service in the U.S. Data speeds, however, are limited to 256 Kbps, which is considerably slower than the 10 times faster (or more) LTE data speeds seen in the U.S.

For international calls, the cost is 20 cents per minute, which is considerably less than prices of as much as $1 per minute on many carriers. Texts are unlimited within the $20 per month rate, according to Google's FAQ.

Google has set up roaming arrangements with carriers in all 120 countries, For other countries, users will need a SIM card that works with a specific carrier. For the international business traveler who visits 10 to 20 countries on Google's list, "this is a very, very good plan," Entner said.

T-Mobile also offers competitive international roaming, although data speeds are somewhat slower than what Google is offering, Entner said.

Small businesses with up to five workers, whether in the U.S. or traveling internationally, might benefit as well with Project Fi, especially if each user is using less than 4 GB of data per month, Entner said.

Menezes said that Google has essentially created a flat-rate structure for international usage, which could eventually push AT&T and Verizon to do the same.

Technology innovation

Google also described new technology for Project Fi that will allow users to move seamlessly from 1 million high-quality Wi-Fi zones to LTE cellular from Sprint and T-Mobile.

With the help of a special new SIM card in the Nexus 6, users are supposed to get access to the highest-quality connection on the fastest network, whether Wi-Fi or one of the LTE networks. Phones can access the better of the two LTE networks in any given location, according to Google's description.

"If you're on one network and we detect our other 4G LTE network partner has a stronger signal, you're moved over to the other network to get the fastest available speed," Google's website says.

While roaming between network providers has gone on for years, it is unique that Google, as a new MVNO (Mobile Virtual Network Operator), is able to do so. Menezes said the shared cellular network feature "could be the most revolutionary part of Project Fi."

Entner said it's likely that voice calls on cellular would still be carried via older GSM on T-Mobile and then connect to a different voice technology, CDMA, on Sprint. However, T-Mobile now has Voice over LTE in place, and other carriers are moving toward VoLTE. Google's description of Project Fi on its website refers to using LTE with both carriers, with no mention of GSM or CDMA for voice. Google couldn't be reached to clarify whether those older technologies will be used.

In any event, the claims that these various mobile connections will be automatic for Project Fi users remains to be seen. "Quality of service will need to be good," said Carolina Milanesi, chief of research at Kantar WorldPanel. "The moment you are trying to figure out why you have no coverage is the moment you give up."

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.

"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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