Google Unveils Wireless Service Called 'Project Fi'

Jewel Samad, AFP/Getty ImagesA Google Nexus 6 smartphone.

By Yasmeen Abutaleb

NEW YORK --Google launched a new U.S. wireless service Wednesday that switches between Wi-Fi and cellular networks to curb data use and keep phone bills low.

The service, Google's first entry into the wireless industry, will work only on the company's Nexus 6 phones and will be hosted through Sprint (S) and T-Mobile's (TMUS) networks, Google said in a statement.

The service, called Project Fi, will automatically switch between the two networks and more than 1 million open, free Wi-Fi spots, depending on which signal is strongest.

%VIRTUAL-WSSCourseInline-884%The service will cost $20 a month plus $10 for each gigabyte of data used. Customers will get money back for unused data.

Sundar Pichai, Google's senior vice president of products, said at a Barcelona conference last month the company was preparing to experiment with a mobile network, but that it didn't intend to disrupt the wireless industry.

The service will be available on only one device and has limited carrier coverage, so it won't make Google a major wireless industry player, said Brian Blau, research director at Gartner (IT).

If successful, however, Google's service could pressure wireless providers to further lower prices and better adapt to the rise of tablets and wearable devices, Blau added. Though some carriers, such as T-Mobile and AT&T (T), allow unused data to roll over, most mobile plans require customers to pay for a set amount of data each month.

But Google first has to "test out features they think are going to differentiate themselves," Blau said, such as being able to transition from network connectivity to Wi-Fi.

If Google is able to provide those features, "it's very possible they could become a major wireless player in the future," Blau said.

Phone numbers will live in the cloud so that consumers can talk and text on any connected tablet, Google said.

The company already has a strong presence in the mobile market through its Android operating system, which hosts some of the most popular apps, such as Gmail and Google Maps.

Google (GOOGL) shares rose 1.3 percent to $549.81 at mid-afternoon.