Rumors about Google jumping into the phone business picked up again today with the Wall Street Journal reporting that Google phones will be available by mid-2008. MobileCrunch reported last month (Google Rumors: GPay and GPhone) that Google powered phones may be in the works. While the company is unwilling to comment at this time, the Wall Street Journal thinks that an announcement is coming within the next two weeks.

There is compelling evidence to suggest that Google is moving into the phone business. Services like Google Maps, YouTube and Gmail are perfect applications for mobile devices, so why not offer an all Google package? The company has increased its media reach over the last few years to include online video, television, radio and print advertising. An inexpensive handset that can deliver multiple forms of media is a good fit with Google’s past acquisitions. If it can make a cheap phone call, so much the better.

And finally, Google is a major bidder in the upcoming sale of the 700 MHz spectrum by the F.C.C. This frequency his highly prized by mobile phone providers for its ability to more easily penetrate building walls than current frequencies.

We’ll have to sit back and wait for Google to make an announcement. In the mean time it will be fun to speculate on how a Google phone will be all things to all people. I can see a phone so cheap people are paid money to take one, all applications are free, and the battery is replaced by a tiny fusion reactor.