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What Google's Project Fi means for mobile operators

Earlier this year Google revealed it had amassed more than one billion Gmail users globally. Gmail is the seventh Google service to reach that imposing milestone; not bad for something which, to begin with, was available by invitation only. Google’s U.S. MVNO, Project Fi, has itself just emerged from its invite-only infancy and speculation as to its growth prospects is rife within the mobile industry.

Last month Google announced a deal which sees Hutchison’s MVNE Hue providing European roaming services for Project Fi. The deal raised the prospect of a full Fi deployment in one or more European markets, and the internationalisation of an aggregated connectivity service proposition from one of the world’s most powerful and disruptive companies.

What is Project Fi?

Incumbent mobile operators are doubtless observing with something between interest and trepidation. Google’s positioning of the operation is ambiguous; projects can be side-line experiments or undertakings on the grandest scale.

Pitching Fi as a project allows Google to show a little deference to the operator ‘partners’ supplying the cellular access, while also hinting at a far wider plan to force fundamental evolution in smartphone connectivity provision.

In the Project Fi model, after all, mobile operators are played off against one another on a connection by connection basis. In the U.S. there are three suppliers competing to offer the best quality service at any given moment. And as the MVNO’s brand reminds us Wi-Fi — in particular the Wi-Fi shared for free by all manner of businesses and public locations to enhance the customer or visitor experience they offer — is a key ingredient in the service.

The trick is in the mix

In a blog post earlier this year which coincided with Project Fi being made available to all U.S. users, Google shared some of the early learnings from its MVNO play. Second on the list was the observation that high quality public Wi-Fi is both abundant, and well used by Project Fi’s early customers. For this most innovative of MVNOs, the trick’s in the mix.

This is a service designed to reflect current smartphone user behaviour and thinking. It displays an understanding that, wherever the consumer goes, they want the best connectivity they can get. That could mean the cheapest, it could mean the best quality; ideally it has to be both. Project Fi recognises the importance of Wi-Fi — in particular public Wi-Fi — in meeting this demand and makes it part of a seamless, managed connectivity service.

Meanwhile, auto-connecting to Wi-Fi offers Google a low-cost connectivity option which helps it to minimise its wholesale cellular costs and makes it easier to offer refunds for unused cellular data.

Most mobile operators prefer to let their customers manage their own Wi-Fi connectivity, even as they promote services like Wi-Fi calling which depend on a connection being made to be of any value. Given how complex and frustrating it can be connecting to public Wi-Fi, and given the huge variations in quality of connection, operators are largely missing the chance to add value to this crucial part of the smartphone user experience.

Research published by analyst firm Parks Associates last month revealed that two thirds of U.S. consumers who are likely to switch carriers in the next year felt access to Wi-Fi as part of their mobile service would be 'very important' to their decision. Within the survey that ranked Wi-Fi connectivity as a more compelling piece of the proposition than a loyalty rewards program, the chance of an early handset upgrade, or a long contract to offset upfront costs — and equally attractive as the ability to roll over unused data.

Wi-Fi and rollover — both key elements of Project Fi — were second only to good customer service on customer wish lists.

It is not difficult to understand what has prevented mobile operators embracing shared public Wi-Fi. It is fragmented in terms of ownership, ease of access, and quality of experience. It is not the kind of network they are used to. But, crucially, it is the kind of network consumers are used to. And there are ways in which the fragmentation can be overcome to ensure a great user experience.

Project Fi has broken ground and Google is clearly in expansionist mode in its home market. It is a model other MVNOs can and will seek to replicate, one which leaves mobile operators having to compete to provide wholesale capacity connection by connection, and one which is explicit in its recognition of the value of public Wi-Fi. It is a model attuned to consumer demand.

Google has an awful lot of customers to win before it can achieve global scale for Project Fi, of course. But mobile operators have an awful lot of customers to lose.

Dave Fraser, CEO, Devicescape