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July 23, 2007

Google May Bid on Wireless Spectrum

Google is willing to commit $4.6 billion to bidding on the wireless spectrum up for sale, available once the switch to digital television takes place.  The commitment comes if the FCC is willing to embrace four conditions Google is placing on its bid.  As detailed in the official Google Blog, they are

  • Open applications: consumers should be able to download and utilize any software applications, content, or services they desire;
  • Open devices: consumers should be able to utilize their handheld communications device with whatever wireless network they prefer;
  • Open services: third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and
  • Open networks: third parties (like Internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee's wireless network

AT&T and other carriers denounced the open network requirements and suggested that would destroy their business model.  AT&T changed its tune when FCC Commissioner Kevin Martin floated proposals that embraced some, but not all, of Google's proposals.  Martin's proposal specifically lacked the wholesale condition.  AT&T later said that Martin's proposals represented a compromise that would not destroy the carrier's business model after all because it wouldn't be forced to resell spectrum.  That's true in the sense that AT&T or Verizon winning the sale wouldn't force them to open up anything to other players and would give them control over some aspects of the open device requirement.

Google's entry into the wireless Internet business could have serious impact both on wireless phone networks and the Internet generally.  Google could offer competitive WiFi service that gives away some access others charge for, all ad supported of course.  That would probably peel away some (a lot of?) customers from existing carriers.  Google could position itself to become another network offering all kinds of services such as Voice over IP, video leveraged through YouTube, along with all the other brand recognized services that a traditional ISP offers.  The company had purchased a significant quantity of dark fiber over the last several years and may be ready to compete with the telecoms head on. 

It would be something for a company with enough leverage, money, brand recognition, and market power to force the telecoms to compete in a world they previously defined.  Microsoft isn't going to do it as they won't want to jeopardize selling software that AT&T uses to power their U-verse TV over IP service.  Yahoo won't do it because they have more fundamental problems aside from their relationship with AT&T as the service provider on the AT&T network.  Imagine a world where the Internet came to you over the airwaves like television, with ads powered by Google.

July 23, 2007 | Permalink

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