Google confirms it's testing wireless service

The existence of the Wi-Fi service, which offers high-speed connections to the Internet over short distances, is confirmed by public pages on the company's Web site and was first reported in a Silicon Valley newspaper in July.

Google spokesman Nate Tyler said the current test is limited to two public sites near the company's Mountain View, Calif., headquarters--a pizza parlor and a gym--located in the heart of Silicon Valley.

"Google WiFi is a community outreach program to offer free wireless access in areas near our headquarters," Tyler said.

"At this stage in development, we're focused on collecting feedback from users. We'll determine next steps as the product evolves," he said.

Free wireless communications would take Google even further from its Internet search roots and move it into the fiercely competitive world of Internet access providers and telecommunications companies.

Tyler said the project was started as part of a Google engineer's "20 percent time project."

Google encourages its engineers to spend 20 percent of their work time developing independent projects. Several of Google's new products have grown out of such projects, including Google News, contextual advertising program AdSense and social-networking test project Orkut.

The Google Web site has several references to Google WiFi but provides few details. One page refers to a product called "Google Secure Access," which is designed to "establish a more secure connection while using Google WiFi."

The company has already launched a sponsored Wi-Fi "hotspot" in San Francisco's Union Square shopping district in April with a start-up called Feeva.

In July, the San Jose Mercury News reported that in exchange for using the free Google WiFi service, customers would be required to load a copy of Cisco's secure network software and Google's "toolbar" program on their laptops.

Speculation about a forthcoming Google WiFi service was stoked in August following an article in Business 2.0 magazine, which argued that the company was considering building a U.S. broadband network capable of targeting specific advertising to users based on the location of their Wi-Fi.

As evidence, the magazine pointed to what it said was Google's purchase of unused, high-capacity fiber-optic network connections left over from the telecom bust earlier this decade. Google responded saying that such purchases were natural for a company with one of the larger Web sites.

But the company has declined to discuss its broader plans.

Analysts have voiced concerns that Google could extend itself too far beyond its core business, while acknowledging that its vast financial and engineering resources could produce results.

"Becoming a service provider would be quite a stretch for Google, but considering the billions of dollars Google could throw at the problem it could become a reality," Ovum analyst Roger Entner wrote in the wake of the Business 2.0 article.

Google, which is rapidly expanding beyond its core Internet search service, introduced an instant messaging and Web telephone calling service called Google Talk in August.

Its shares were up 1.5 percent to $308.30 in trading late Tuesday afternoon on the Nasdaq exchange.

"I think strategically it absolutely makes sense but its profit and loss impact remains unclear," said Jefferies & Co. analyst Youssef Squali.