So, the cheapest I know of, for a cell phone company is Net10 who offers cellular service for a mere $.10 per minute. The cheapest cell phone has recently just be awarded to Motorola, lets just say I recently bought a Motorola Cingular (now AT&T) GoPhone for a little less than $20 and it came with $10 worth of free minutes. So, the question is, how much of Google’s phone/services could they afford to offer for free, if advertising is factored in?

So, that phone I bought for $20, yeah, that’s not going to be able to do enough to satiate Google. I think, the Motorola Razr, not the new Razr2, the original, is both well priced, and well featured to do most of what Google wants (as far as we know). It is also probably the cheapest phone, and thus the most likely to be seen for free, we could possibly see repping the Google name, so these rumors of HTC, Samsung, and LG being in on the deal sound great, but I would be willing to wager that if any one of those companies gets the contract you will have to pay for your Google gPhone phone. I am not saying this is a problem, since if I was getting completely or partially free service I would be far more willing to pay for a nice phone with the Google name on it.

Free service, that’s quite a novel idea, and is already being explored by some other companies, obviously it is ad powered, and no one that I know of is offering completely free service, just subsidizing some portion of your bill or your usage with ads. In fact, Virgin Mobile offers a deal where you can earn up to $15 credit to your account each month by watching 75, roughly one-minute long, ads. If you do the math, that equates out to $.20 per ad. Another thing to note is that Virgin also charges more than Net10. So, minutes on a wireless network can be as cheap as $.10 per minute, and an ad can be profitable at a rate of $.20 per ad to the customer. So theoretically you could offer up 450 minutes of free service each month for about 7.5 ads per day. The upside to that many ads per day is they would become more and more targeted the more you used both your phone and your personal Google account online, this would both make them more profitable for Google and less annoying to you.

So, Google could throw tons of money at this gPhone project and come out the other end several billion dollars more broke but have one or more nice models of phones, and their own wireless phone/data network. Or they could go with phones that are already being produced, and the MVNO business model, and a highly innovative advertising scheme that would allow them to offer the whole thing for free. I personally would get one either way, but the free business model would attract a whole slew of new users, and would benefit Google in more ways than just higher click-throughs on their ads.