Google has invested hundreds of millions of dollars in a prototype cell phone that could reach markets within a year, and is courting U.S. and European mobile operators, The Wall Street Journal reported on Thursday.

Showing the prototype to cell phone manufacturers and network operators, Google continues to hone the technical specifications that will allow the phone to offer free subscriptions by bundling advertisements with its search engine, email, and Web browser software applications. It had approached AT&T and Verizon Wireless, in recent months to ask them to sell phones with Google service.

T-Mobile and Vodafone already incorporate Google search in their mobile Web service in Europe, while AT&T offers it as one of several Web search options.

Google declined to comment on the report of the prototype but confirmed that it is working with partners to expand its software applications from the traditional Internet to mobile devices.

"We're partnering with carriers, manufacturers, and content providers around the world to bring Google search and Google applications to mobile users everywhere," Google spokesman Michael Kirkland said.

Industry watchers have long heard rumors that Google was designing its own mobile phone. Google added fuel to that speculation in July when it announced it was willing to spend $4.6 billion to buy wireless spectrum in a U.S. Federal Communications Commission auction and it had invested in cellular technology company Ubiquisys, a femtocells vendor based in Swindon, U.K.