AT&T Logo circa 1969 - AKA The Bell, but know more fondly as "The Bismark Helmet" by customers of that era and earlier.

What?

As of this writing, I have been using Google Project Fi for no more than a few weeks during Googles staged release of the project.  I applied to try this on day 1 because I used to dream of having this kind of well-resourced project to work on back when we were working on open-source telephony stuff in the 90s.

Project Fi acts like a cellular provider.  It makes available data, voice, and SMS services to subscribers who have an android phone made recently  (although they officially only support the Nexus 6 as of this writing).  Google sends you a SIM, that SIM gives you service, and you send them money each month.  Cellular service provider.

Project Fi is not like other cellular service providers, however.  It is an aggregator.  To connect a subscriber to services, Project Fi uses Wifi, and it uses all the cellular providers who are willing to sell their services to Google.  Software on a Google Fi cell phone keeps the subscriber on the best service available to them, whether that's an open wifi channel, or any cellular provider with a nearby tower.  Theoretically, Google Fi can effectively aggregate all cell service providers and all free wifi hotspots into a more reliable system that can be sold at a much cheaper rate than a single provider could offer (about 20 bucks a month for all you can eat plus 10 dollars per gig of data, or about half the cost most providers offer).

There is an acronym for a cell service provider that resells service from one or more cell networks, MVNO.  The wikipedia page covers it - totally unnecessary to read about that, but I should mention that it exists.

AT&T Logo From 1982 - AKA "The Death Star" - ( we star wars kids frequently remixed that logo as shown ).

Why?

Project Fi is important first because it subverts the price/feature model of one of the most hated industries in the world.  In the US and many other countries, the cellular phone industry falls very near the old telephone monopoly tree in terms of monopoly-like behavior.  They have an analogous advantage - monopolies on establishing circuits over certain transmission medium - that the old phone companies had with their copper lines - but the cell service providers advantage has a gaping hole ready for exploitation - the ever-more-open-and-available, well-established wifi spectrum.  

Project Fi is important second because this is a step toward using microcells and all of our available wireless spectrum more efficiently and wisely.  With a smart aggregator such as Fi, if any spectrum or equipment is overwhelmed, that can be worked around.  More people can use the same infrastructure to get better service because we are improving the spectral efficiency at the system level for mobile broadband consumers.  Of course, in our day and age, that only works if the right agreements are in place and people play nice.  Someone has to incentivize that happening.  Google is that someone.

There have been many attempts to normalize us cellular pricing and increase the utility of these services for consumers.  There were a few aggregators out there that tried to make a dent.  They didn't.  I mean, I tried them and they are o.k., but they just used wifi and one provider, usually.  No negotiating power.

O.k. That really isn't an AT&T Logo but I felt compelled to post this one anyway.  

How?

Google succeeds where others have failed because Google has generated massive power to make agreements with cellular providers that see the writing on the wall.  They are utilities, now.  They need to be utilities or they will simply be bypassed by the various attempts at using the wifi spectrum (and their competitors) to deliver all content.  Google is attacking them from all fronts - under the ground with google fiber, in the streets with google wifi, even from the sky with loon.  And Google isn't the only company doing this - all the big content providers want everyone in the world to eat as much of their content as physics will allow - i.e. Facebook with internet.org, and the long tail of businesses whose models depend on inexpensive broadband.  The cellular providers must adapt to stay relevant - and find their place as better stewards of spectrum and infrastructure than they once were.

So Google has taken the ambitious step of introducing Fi, a service that simply treats cellular providers like the utilities they are.  Google buys service from any provider, paying a fair rate that is profitable for the provider (I think), and using all provider infrastructure as flexible spectrum gateways.  

Anyway, the upshot is that this plan is working.   Google basically has the minimum viable agreements and tech complete.  We are testing and it's going pretty well, despite the unavoidable slew of bugs that you would expect with a new product (some old notes on the beta project issues here).  

It's just not fair to ask any other cellular service provider if they can give you what Project Fi can provide - the reliability, the price, the tight integration between services that Google is providing - they will ultimately throw up their hands and walk away.  

AT&T Lucent Logo - called the Innovation Ring, AKA "The Brown Ring of Quality" AKA "The Big Red Zero" AKA "The Flaming A**hole" - they kind of gave up on logos after a this one, and are now sticking with the death star in hopes that tiny franchise and moniker will fade from memory.

Oh...I get it.

As to the future effects of Fi, your speculation might be as good as mine, but I have put my speculation into an eight paragraph essay that you are already reading.  ;) If you are interested, I would be happy to chat with you about this stuff.

The big thing that Fi might do is initiate a cycle of disruption among telecom monopolies.  Initially, this takes the form of increased competition.  The hope is that gouging, malfeasance, and mistreatment get reduced, at least temporarily.  Ultimately, more players might get into the market, or google might become a monopoly, and the cycle continues after some temporary relief.  Or, the market might, just maybe, change completely when it is ruled by MVNOs instead of the incumbent monopolies - imagine unlimited data at a low cost - that's worth supporting.

Once Project Fi is more reliable and fully rolled out (sometime in 2016 by my estimate), then the cellular services market revenue will *begin* to get clobbered - cell service providers will be selling to aggregators, and other aggregators will be just copying Google Fi - with less leverage.  Consumers will win big time.  Carriers can still win - they just need to lay off half their employees - the folks who sell to consumers - over time, and start selling only to aggregators - they might even make way more profit.  Maybe this whole process takes ten years.

This is a big departure from the simplistic strategy most people saw for Google - primarily competing with Apple to build phones and a phone ecosystem.  And that is a very bad development for Apple.  Apples iPhone revenue is about 70% of their total revenue at this point.  Most cellular carriers heavily subsidize the sale of every iPhone with a two year contract up front, giving the consumer a discount on the phone and giving Apple a 50% profit margin on the iPhone itself (well, there is the crazy pricing power they get from being the bulk of the cell phone market).  Carriers only make that back after two years of payments, *if* the consumers can pay, while Apple just sits on that cash.  I'm pretty sure that Apple even makes some other contract revenue at times - haven't followed it exactly - not sure all Apples agreements show through in their quarterlies anyway.  

O.k. this is the most speculative bit.  Take that 70% market share and cut it in half in a few years.  Yeah, Apple has nice phones, but the competition has caught up in hardware, and almost in usability.  The Nexus 6 and other phones are just as nice as the iPhone6 (IMHO).  The integration is even tighter for Google now that they have Fi pushing all messaging, unified, through hangouts.  Apple just won't be available on the best services anymore.  I see more and more people (read:nerds) slightly embarrassed to have the apple brand on hardware they own - just looking for an option.  Flight from iPhone means flight from the Apple ecosystem - and when you leave the Apple ecosystem, like I did, you find that your monthly bills go way, way down - you're basically rich.

Apple either has to help push contracts at twice the price and lower reliability, or get on board with Google Fi, or compete with Google Fi by developing a similar service.  In the first case, that will get increasingly hard and eat into their sales.  In the second, Google makes money every time an iPhone is sold.  In the third, well, it's not going to be easy for Apple to play catchup, but that is probably their best option.   

Apple will have some pretty exciting strategy meetings and frantic work ahead of them.

That's the way I see it.  A whole lot of money will be going from Carriers (and possibly Apple, depending on their next moves) into the pockets of consumers who love broadband and companies that make their money delivering content.  Look for Apple to compete hard with Google Fi, possibly even buying a carrier or two, or creating a cellular/wifi aggregator of their own, or creating a huge legal morass, or all three.  Whatever Apple does, we should expect the unexpected.  The incentives for the bulk of the wealthy folk to keep things as inefficient and expensive for the masses as possible, continue to exist.

However, if Fi works well for the masses, it may serve as a clarion call for service providers and governments to look to use the spectral efficiency available to them.  The Googles and Facebooks of the world are currently incentivized to foster open markets for wireless carriers.  That's a rare bit of luck, and that's the main reason I'm stoked about the progress with Fi.  Well, plus the cheap service I'm getting.  Reclaiming monthly income from cellular service providers will be broadly appreciated by all.  If we only had a better dumb-phone mode than the ones that exist we could reclaim some of our time as well.

Google Project Fi logo - I suspect this is intentionally too obscure to really ridicule, and probably too noble an effort to do so at this point.

My Old Notes on Project Fi Bugs and Workarounds