Google ponies up $4.6bn for wireless spectrum
If the FCC obeys its demands
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Google's riches are exceeded only by its cheek. When the Federal Communications Commission auctions off the coveted 700-MHz wireless spectrum, the search giant has said it will lay down a bid of $4.6bn - provided the auction is handled exactly the way Google wants it handled.
Recently vacated by television channels making the switch to digital transmission, the 700-MHz band goes up for auction sometime early next year, and Google has been calling for the FCC to require "open-access" to the spectrum, arguing that consumers and businesses should have the freedom to use wireless networks however they choose - without answering to big-name carriers like AT&T and Verizon. It's been rumored that Google would bid for the band if the FCC opts for open-access, but this is the first time the Mountain View outfit has publicly admitted as much.
"For several years now, many Googlers have been working to identify the obstacles that prevent the Internet from being available to everyone on the planet," wrote Chris Sacca, Google's head of special initiatives, on the company's official blog. "Today, we're putting consumers' interests first, and putting our money where our principles are - to the tune of $4.6 billion."
The catch is that the company won't bid unless the FCC adopts all the open-access requirements it recommended with an electronic filing early last week. Anyone who wins a 700-MHz license, Google says, should be required to provide open access to consumers as well as third-party companies: Consumers should have the freedom to attach any mobile device to the network and use any application (provided they don't harm the network); resellers should be able to acquire wireless bandwidth from 700-MHz licensees on a wholesale basis, so that they too can offer service to consumers; and ISPs should have the power to plug into the network at any "feasible" point.
When contacted, the FCC declined to comment, but it doesn't seem that the draft rules recently laid down by chairman Kevin Martin go quite as far as Google would like. Judging from an earlier conversation with an FCC official, the draft rules fulfill Google's requirements where consumers are concerned - but not necessarily third-party companies. Plus, the draft rules apply only to a portion of the band being auctioned off (22MHz out of 60MHz in total).
Martin's draft rules have yet to be approved by the other FCC commissioners, and current wireless carriers like Verizon have vehemently opposed open-access, hoping to retain the current set-up. You know, the one where they have complete control over the network.
"In order to apply with a variety of [FCC] rules - including both technical rules and public interest obligations - wireless carriers must be able to manage all aspects of their network," reads a recent FCC filing submitted on behalf of Verizon (PDF).
Verizon has even said that open access would curb innovation. "The one-size-fits-all mentality that characterizes open access regimes for the wireless industry would begin the process of stifling innovation and creativity in our industry," the company's general counsel recently said at a recent congressional hearing.
Tell us another one.
Others have supported Google open-access requirements, including Skype and two public advocacy groups, but it's Google that has the deep pockets. The $4.6bn its prepared to bid is the reserve price set by the FCC. "With any concerns about revenue to the U.S. Treasury being satisfied, we hope the FCC can return its attention to adopting openness principles for the benefit of consumers," said The Official Google Blog.®
COMMENTS
Look to the pasted
The U.S. has fell far past the leaders in broad band and cell access. I think we got side tracked from a level playing ground in both. It's time to get back on track. The Phone companies both cell and land line have not kept up with the modernization of the network. Letting them do it putts us behind in both technology and cost to the end user. I for one don't like the cost or limiting selection of devices for broadband or cell access. I say let competition back in to the market.
FCC
I understand the sentiment that Google is basically trying to buy the auction rules... but on the flip side, the FCC is horrible at doing its job. I happen to agree with Googles rule and I'm tired of the FCC being morons about everything (million dollar fine for a nipple anyone?). I'd rather it be Google buying the auction then Verizon doing the same thing. Cell companies have had it too good for too long, I mean look at the state of networks from the US to Europe? No 3g, no innovation, just price gouging.
Regardless of past conduct...
Regardless of whether Google is generally a "good" company or a "bad" company ...this is effectively bribing the auctioneer by providing financial incentives to change the rule book. That is both arrogant and ethically questionable. If this is Google putting their money where their principles are it doesn't say much for the principles...
Google don't own the monopoly on ethical business or moral principles, they don't have every good idea about how best to serve "consumer citizens" and do what is right and they are an interested party in the auction. Do we want Google to have the exclusive say in how spectrum is auctioned? Or even a large say...lets face it Google really are unproven in wireless and will be until their municipal wireless operations have matured, while even if you don't like the cellular operators you have to admit there is more competition in that market than that in which Google operates, and several billion people value mobile phones enough to pay for them.
If you want to use the language of anti-trust this is Google seeking to manipulate the regulation in one market (wireless), in such a way to enable it to leverage it's near dominant position in another market (Internet advertising) to gain a position of market power in the wireless market. I don't dislike Google (or MS or Apple): they are just a company with shareholders and should be expected to act to profit maximise, as is their legal obligation. Regulators like the FCC should listen to inputs from everybody on auction design and regulation, and come up with an independently fair set of rules to maximise achievable value, and reject such blatant financial lobbying.
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