On paper, Project Fi sounded like a really clever idea. Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google launched its hybrid mobile virtual network operator (MVNO) back in 2015; MVNOs purchase wholesale capacity from wireless carriers in order to resell service under a different brand, but Google's twist was to combine the networks of Sprint and T-Mobile while supplementing coverage with Wi-Fi calling. Project Fi added U.S. Cellular to its "network of networks" last year. Even the billing system was extremely competitive and pro-consumer: Google only charges you for what you use, crediting back pro-rated refunds at the end of each billing cycle for unused data.
The biggest problem? Project Fi only works with Google's own Nexus or Pixel phones. Currently, the only four devices that are officially supported are the Nexus 5X, Nexus 6P, Pixel, and Pixel XL. That may finally be about to change.
The official Project Fi account has shared a new tidbit on social media this morning, saying a "mid-tier" phone from a hardware partner may launch later this year and support Project Fi.
We hear you loud and clear. Keep an eye out for a new Fi-compatible device at a mid-tier price from one of our partners later this year. https://t.co/74U3bq16pa— Project Fi (@projectfi) June 29, 2017
A couple months back, there were reports and rumors that Google would be bringing its Android One initiative to the U.S. Android One is the effort to standardize Android phones in emerging markets, both in terms of hardware and software. Those reports suggested that any U.S.-bound Android One devices would support Project Fi. It's not clear which phone we're talking about, and it's not as if there's a lack of midtier smartphones in the U.S., but this could give Project Fi the shot in the arm that it needs.
Project Fi-nally ready to expand?
Google has dipped its toes into effectively becoming an internet service provider in more ways than one. There was Google Fiber, which failed mostly due to the fact that building out fiber-optic infrastructure is prohibitively expensive. The high costs served as a natural limiting factor that prevented Google Fiber from becoming widespread, despite overwhelming demand among consumers for gigabit speeds at competitive prices.
Project Fi is Google's take on cellular connectivity. While MVNOs in general have always faced tough economics, it's better than the aforementioned wired route. By purchasing wholesale capacity, Google doesn't need to worry much about investing in infrastructure. Like other MVNOs, Project Fi's primary operational tasks are marketing and customer support. Seeing as how customer support is not one of Google's strengths (being predominantly a search engine and all), it's feasible that Google consciously chose to limit Project Fi's availability because it knew it couldn't handle the scale.
Google is signaling that it's ready for Project Fi to expand.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.