Back when Google was floating the idea of what would eventually become known as "Android", there was a lot of speculation that Google could be making their own phone and offering calling for free — subsidized by ads rather than your wallet. History, however, has shown that's not what actually happened... but it may have shown us the direction that Google was heading with their operating system that is now on three-quarters of wireless devices.
700 MHz LTE
The rumors of Google getting into the telephone business resurfaced when they participated in the bid for the 700 MHz spectrum in 2008 (officially known as "Auction 73". Eventually the spectrum was awarded to Verizon and is currently serving our their flavor of LTE.
Google had originally asked for four types of "open" access:
Open applications: Consumers should be able to download and utilize any software applications, content, or services they desire;
Open devices: Consumers should be able to utilize a handheld communications device with whatever wireless network they prefer;
Open services: Third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and
Open networks: Third parties (like internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee's wireless network.
Some think Google's participation in Auction 73 wasn't to obtain the spectrum, but to force the price of the spectrum higher so the winner (whoever it might be) would be bound by "open" access requirements that Google and the FCC had worked out if a certain threshold price was met.
Unfortunately, only the first two "open" requests were included in the requirements that made it to Verizon's LTE service.
Over-the-air television stations in the U.S.A. have almost entirely converted to a digital signal. The majority ceased their analog transmissions by February 2009. A few low-power stations remain that are scheduled to shut down no later than September 2015. Switching to all-digital meant that some space was freed up in the spectrum that had previously been occupied by television broadcasts.
This "white space" has long been a target of companies to utilize for data service. Who's been pushing for use of this white space? You guessed it: Google.
Google is already rolling out their Fiber service in select cities in the U.S.A. This has brought not only television services, but upload/download speeds of up to one gigabit to homes. To put that in perspective, with the Cable connection I have at my location I can't seem to get more than 2Mbps down, and only around 200Kbps up.
Other than its limited deployment, what's the downside? Customers are tethered to their home to use the service. As soon as they leave for school or work, they leave their Google service behind.
Given all the activity in wireless and their success with Google Fiber, it shouldn't be hard to believe that Google is interested in becoming a wireless service provider. They've already tipped their hand with 700MHz LTE and White Space, and they already have proved they have what it takes to be an ISP with Google Fiber. All they need is the spectrum to get into the wireless game. All of which lends credibility to the rumors that Google may be in talks to deploy a wireless network utilizing Dish Network's spectrum.
What does this mean to you?
Google is all about data. Keep in mind that Google also has Google Voice for VoIP phone calls and Google Talk for audio and video chatting. You don't need "voice" service to make or receive phone calls — data works just fine. Besides, look at how you use your smartphone — how much time do you spend using it as a "phone" compared to everything else?
Google could offer a data-only plan that ties into Google Voice for "traditional" calling that would be all digital. This would cut expenses of the wireless network and help wide-spread deployment happen quicker than if both data and voice were being deployed.
In the U.S.A. we currently we have four primary players in the cellular industry: AT&T, Verizon, T-Mobile, and Sprint. All four are "traditional" cellular carriers, and they're all stuck in the past. They have legacy customers they have to support on outdated technology, which prevents (or delays) them from opening new services and focusing on data rather than voice.
Google, on the other hand, would have nothing "legacy" to support. They'd be able to deploy the most up-to-date technology with emphasis on data speeds and services.
Phones would need less chips, fewer radios, and not as many antennae, which would reduce costs, held reduce the size of smartphones and tablets, and maximize battery life.
Google could take everything they've learned from Google Fiber and offer a subset of that to "Google Cellular" or "Google Wireless" subscribers. They could even offer the same type of content to homes using Google Wireless as they do to homes with Google Fiber — with the obvious speed limitations inherent to wireless versus fiber.
Last, and probably most obviously, an additional player in the field, one unencumbered with legacy technology and outdated ideas of what a "cellular carrier" is "supposed to be" would shake up pricing and offer more options to consumers.
Any way you slice it, Google as a wireless carrier would be a very good thing where the consumer wins.