Battle for the Third Screen

America's "third screen" -- that is, the mobile market -- is at a crossroads. The direction it will go is anyone's guess, but IDC is advocating that Internet powerhouse Google (Nasdaq: GOOG) should take a leading role in determining its path.

Conditions are ripe for a strong player like Google to transform the third screen, which is drawing viewers for entertainment and information almost as much as TV and computer displays, IDC says in a study released this week.

"The FCC has endorsed open access requirements for the upcoming 700 MHz spectrum auction, the Apple (Nasdaq: AAPL) iPhone has reset the bar for consumer expectations of mobile content experiences, and the inefficiencies of the mobile ecosystem are set to depress mobile content growth rates," IDC notes.

What Will Google Do?

"The number one question in mobile today," notes Scott Ellison, IDC vice president of mobile and wireless communications, "is what will Google do in the upcoming 700 megahertz auction? This question implicitly recognizes Google's unique potential to fundamentally change the mobile industry as we know it. The real question is whether Google wants to; the how-to is clear to IDC."

Ellison's report outlines a 10-point strategy for Google to transform the mobile ecosystem and dominate the third screen. Among his recommendations:

• Reinvent the mobile ecosystem by refocusing it on value creation;
• Align it with the mobile business priorities of content providers and advertisers;
• Build a 700 MHz mobile system;
• Position the mobile Internet as the key mobile interoperability medium;
• Build mobile content registries;
• Develop powerful and slick mobile widgets;
• Mobilize the Internet;
• "Relevantize" the mobile user experience;
• Localize the mobile experience; and
• Relentlessly and boldly innovate.

Open Access Advocate

Google, together with a number of public interest organizations, has been advocating that when the federal government auctions off a new chunk of wireless spectrum next year, it should impose conditions on the winner of the auction.

"In the U.S., wireless spectrum for mobile phones and data is controlled by a small group of companies, leaving consumers with very few service providers from which to choose," Chris Sacca, Google's head of special initiatives, wrote in the company's policy blog.

To give consumers more choice, Sacca advocated requiring any auction winner to support the following:

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

Stake Through the Heart

Such open access could "drive a stake through the heart of current mobile operator business models," according to IDC.

The FCC has decided that about a third of the 700 MHz spectrum scheduled to be auctioned next year will be subject to open access conditions, but Verizon Wireless has posed a legal challenge to that condition.

Along with the rest of the mobile industry, Verizon has been critical of the FCC imposing any conditions on the winner of a spectrum auction.

"The industry changes every day, and it changes because of consumers' wants and demands," Joe Farren, a spokesperson for CTIA, the Washington, D.C.-based association for wireless carriers, told the E-Commerce Times.

"What shouldn't happen," he continued, "is the marketplace changing because of government regulation. We think it's always a bad idea for the government to step into the shoes of the consumer and attempt to speak for what the consumer wants and needs."