FRANKFURT/LONDON (Reuters) - British chip designer ARM ARM.L will demonstrate a prototype of Google Inc's GOOG.O Android mobile phone platform in action next week at the world's biggest wireless fair, a source close to the company said.

Google founders Larry Page and Sergey Brin in a 2006 photo. ARM will demonstrate a prototype of Google's Android mobile phone platform in action next week at the world's biggest wireless fair, a source close to the company said. REUTERS/Chip East

It was not immediately clear on Thursday what the working model that ARM plans to show at Mobile World Congress in Barcelona would look like or who would supply the parts.

Google plans to deploy phones and services using the Android platform commercially in the second half of this year.

Google and ARM declined to comment on the report.

Google established an alliance of more than 30 carriers, handset makers, software firms and chipmakers in November to develop Android, which is based on open-source software and designed to make the Internet work better on mobile phones.

Deutsche Telekom's DTEGn.DE T-Mobile and Taiwan's High Tech Computer Corp (HTC) 2498.TW have said that they plan to offer phones based on the Android platform this year.

Internet search leader Google's entry into the wireless industry will upset established relationships between carriers, cellphone makers and customers and could challenge Nokia NOK1V.HE, Microsoft Corp MSFT.O and Apple Inc AAPL.O, among others.

Google is also bidding for wireless spectrum in the United States in a move that pits it against entrenched carriers like AT&T T.N and Verizon Wireless VZ.NVOD.L.

Its operator partners in the Open Handset Alliance include China Mobile 0941.HK, NTT DoCoMo 9437.T, KDDI 9433.T and Telefonica TEF.MC -- all of which have said they are working with handset makers to develop Google-based phones.

Research firm Strategy Analytics has estimated that Android will be in 2 percent of smartphones this year.