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Google flirts with bid to save the American Dream

$4.6bn wireless move 'probable'

The smart choice: opportunity from uncertainty

Will Google bid for a coveted portion of the U.S. wireless spectrum? "Probably" is the word from chief executive Eric Schmidt.

On January 18, the Federal Communications Commission (FCC) will auction off the so-called "700-MHz band," a swath of wireless spectrum recently vacated by TV stations making the switch to digital transmission, and Google has been flirting with a bid all summer, adamant that the band should provide nothing less than open internet access to consumers across the country. You know, access that's outside the control of big telcos like AT&T and Verizon.

Before the FCC laid down its ground rules for the auction, Google had lobbied heavily for open access to the band, joining a chorus of other voices, including various public advocacy groups, tech stalwarts like Skype and Intel, and a new outfit called Frontline Wireless. Then, in late July, the world's most popular search engine announced that if the FCC obeyed its demands, it would actually bid for the spectrum, offering up a cool $4.6bn.

Well, the FCC obeyed some of Google's demands, but not all. Consumers will have the freedom to attach any device and any application to a 22-MHz section of the band, but Google had also called for a "wholesale condition," which would require the auction winner to resell wireless bandwidth to other businesses - and the commission refused to comply.

Basically, a wholesale condition would create a broad wireless ISP market characterized by, shall we say, healthy competition. "The big opportunity was the wholesale condition," said Ben Scott, Washington policy director for Free Press, a policy group that sides with Google, in a conference call with reporters earlier this month. "What that would have done is create a wireless broadband market that looked like the dial-up market of the late 90s, where users had hundreds of vendors to choose from."

But when the FCC nixed the wholesale condition, Google said that it would still consider a bid. "Under the current circumstances, we are going to need some time to carefully study the actual text of the FCC rules, which are due out in a few weeks, before we make any decision about our possible role in the auction," said Richard Whitt, Google's Washington telecom and media counsel.

The issue came up again yesterday at dinner in Aspen sponsored by a think tank called The Progress and Freedom Foundation. When asked if Google would still bid for that 22-MHz of spectrum, Cnet reports, Schmidt said "probably." "It's highly likely that when we get to that point," he said, "we will see the regulatory framework that is conducive to the bid (we wanted) to make."

The company didn't respond when we asked for clarification, but you can bet that Google and its crew will continue to fight the good fight.

While Schmidt was in Aspen, Frontline Wireless vice chairman Reed Hundt - an ex-FCC head - was at the Hot Chips conference on the campus of Stanford University, tying the 700-MHz issue to nothing less than the American Dream.

Hundt urged his audience to push for an open network that would foster innovation - rather than one that benefits the few. "It is just not the vision of America that we previously applied to these kinds of communications and transportation networks," he said.

Hundt pounded away at the notion that the two largest wireless carriers would have very little incentive to do much of anything with the 700-MHz spectrum – the last remaining airwaves up for grabs outside of the defense department. As a result, he said, tens of billions of dollars that could be spread among myriad hardware and software companies playing off the spectrum will go into the hands of one or two companies.

Even though the spectrum will be auctioned off this coming January, Hundt pointed out, some of the regulations regarding open access will terminate in January 2009, right after the upcoming presidential election. "Among the many things this election will determine is whether the wire-based internet remains open," he said.

And you know what he's banking on: "This network will be a servant of America and not a master of our country's future." ®

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