Another option is to not be running an operating system that betrays your interests. Google can only determine your location using nearby wifi networks if that list of nearby wifi networks has been given to Google through Android/Play backdoors. In fact most privacy issues with phones boil down to running a malevolent OS - protecting against malicious application code is still a difficult problem, but it is at least tractable if you can trust the system code.
(Personally I think the functionality of the OP should be included by default as part of the OS permission system, and configurable on a per-application basis)