Google finally putting its money where its mouth is

 

Google finally putting its money where its mouth is
Google ended speculation over whether it will bid in the upcoming 700 MHz auction. The company is pledging to bid a minimum of $4.6 billion in the 700 MHz auction if the Federal Communications Commission agrees to set aside some spectrum for open access--that is open access the way Google envisions it to be.

Earlier this month, FCC Chairman Kevin Martin leaked his draft order for the 700 MHz band. The proposal would allow a level of open access on two 11 MHz blocks in the 700 MHz band. Martin wants any device and application to be able to run on these networks, but he has apparently stopped short from requiring the winning bidder to open its network up on a wholesale basis. That wasn't good enough for Google. It is attaching stipulations to this $4.6-billion potential bid, saying it will only bid if the FCC enables open applications, open devices, open wholesale services and open network access.

In an interview with Dow Jones, Chris Sacca, head of special initiatives at Google, said Google isn't interested in selling service directly to consumers itself, which runs counter to its business plan. Rather, it wants to oversee construction of a new national wireless network and lease out access to third parties willing to offer open access.

Whether or not you are a fan of open access stipulations, Google's plan sounds like a gamble for a swathe of spectrum that is quite valuable to the entire mobile industry. No one has proven the concept of building a network solely to offer wholesale access for resellers. NextWave tried in the 1990s but eventually defaulted on its installment license payments and filed for Chapter 11 bankruptcy protection--fighting for years for its licenses and eventually winning in the U.S. Supreme Court.

Whether a company is building out its own network or reselling service (even in the 700 MHz band where propagation is better), it's going to be an expensive proposition. We're seeing the expense mounting for MVNOs such as Amp'd Mobile, which is expected to shut down its service tomorrow. 

For ISP companies whose core business isn't operating wireless networks, it's a project that is difficult to justify. Earthlink is already learning this lesson as it attempts to push itself beyond the ISP world. Its two major initiatives--Helio, the MVNO partnership with SK Telecom, and its muni-WiFi deals--are turning into unwieldy mega-million dollar investments for the company. 

Certainly the more ideal solution for Google is to partner with operators willing or required to open services on a wholesale basis, paving the way for a plethora of wireless Google services. I suspect that's why Google has been lobbying the FCC hard for open access but has skirted the issue of whether it would participate in the auction until now. Last month FCC Commissioner Jonathan Adelstein said he was reticent to structure the rules of the 700 MHz auction to encourage the entry of a new operator unless there was a commitment that there would be a serious bidder at the auction. As Jim Cicconi, AT&T's senior executive vice president of public policy, put it last week, Martin's open access proposal is a "put-up or shut-up" challenge to Google.

The question is, is Google's commitment to the FCC and its plans to be a wholesale operator enough for the commission to justify setting aside spectrum for open applications, open devices, open wholesale services and open network access? -Lynnette

P.S. FierceBroadbandWireless' Fierce 15 was released today. Check out the companies with the most promise to shape the industry on the website.

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