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Google (Nasdaq: GOOG) will bid US$4.6 billion or more in the Federal Communications Commission's auction for the 700 MHz (megahertz) band of wireless spectrum, the company announced Friday -- but only if certain conditions are met.
Specifically, Google wants the FCC to adopt rules for the auction that it outlined in a July 9 filing with the commission, requiring four types of open platforms as part of license conditions: open applications, so that consumers can download and use any software, content or services they want; open devices, so consumers can use a cell phone with the wireless network of their choice; open services, so that resellers can buy wireless services from a 700 MHz licensee on a wholesale basis; and open networks, so that ISPs (Internet service providers), for example, can interconnect in a 700 MHz licensee's wireless network.
More Is Needed
"When Americans can use the software and handsets of their choice, over open and competitive networks, they win," Google CEO Eric Schmidt wrote in a letter to FCC Chairman Kevin Martin.
"Unfortunately, the current draft order falls short of including the four tailored and enforceable conditions, with meaningful implementation deadlines, that consumer groups, other companies and Google have sought," he said.
The 700 MHz band spectrum was previously used by TV stations, and is particularly desirable for its ability to travel long distances and go through the walls of buildings. Now that TV broadcasters are moving to digital distribution, the FCC will auction off those bands in January.
AT&T's About-Face
Martin's proposed auction plan requires that just a third of the available spectrum be open to all devices -- not enough to satisfy Google and other players.
That plan just gained new support from AT&T (NYSE: T), however, which announced Thursday that it will go along with Martin's open access specifications. Previously, the company had vigorously opposed any open access requirements in the plans.
AT&T also expressed incredulity Friday at Google's stance.
"Google has now delivered an all-or-nothing ultimatum to the U.S. government, insisting that every single one of their conditions 'must' be met or they will not participate in the spectrum auction," said Jim Cicconi, AT&T's senior executive vice president for external and legislative affairs.
"Google is demanding the government stack the deck in its favor, limit competing bids and effectively force wireless carriers to alter their business models to Google's liking," Cicconi added. "We would repeat that Google should put up or shut up -- they can bid and enter the wireless market with any business model they prefer, then let consumers decide which model they like best."
Defining Decisions
"This is getting interesting," Neil Strother, wireless analyst with JupiterResearch, told the E-Commerce Times.
"When a company is willing at the get-go to say, 'Here's $5 billion or more to spend,' it's quite a commitment," Strother noted.
Decisions on the auction rules promise "to define a fair amount of the landscape for the next decade or more," Strother added, with the potential to change wireless communications in significant ways.
"The key part will be the structure of the open access -- how it's defined, as well as who wins and who loses," he explained. "There's a lot of money to be made or lost here."
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