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Auction Theory

By - July 25, 2007

Alas, I am on a plane most of today, but this caught my eye:

U.S. Federal Communications Commission Chairman Kevin Martin said an airwaves-leasing proposal by Google Inc. may discourage bidders in a government auction from developing their networks.

Google said last week that it will bid at least $4.6 billion for the airwaves if the winner of the auctioned spectrum is required to lease access to the airwaves at wholesale rates. That may make bidders “less willing” to build out that network, Martin said today.

Google, owner of the most popular search engine, has sparred with AT&T Inc. and Verizon Wireless, the two biggest U.S. mobile- phone companies, over rules for the auction. The carriers plan to use the airwaves to offer more of their own mobile Web content, while Google wants the network to be open to all devices. Google also wants the spectrum to be resold if there’s excess capacity.

The auction rules should provide “maximum incentive to invest in the underlying wireless network,” Martin said during a U.S. House of Representatives Telecommunications subcommittee hearing. The FCC expects to vote on the rules by July 31, Martin said after the hearing.

Martin, who has proposed a minimum bid price of $4.6 billion for the spectrum Google is seeking, wants the winner to open its network to any legal mobile device or application. While his plan would allow companies to resell airwaves, it wouldn’t require it.

Seems that Google’s game theory is starting to play out…OK, I’d wager Google isn’t playing games, per se, but I plan to speak to Google about this in the coming days…

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2 thoughts on “Auction Theory

  1. John says:

    If Google’s willing to bid $4.6B, aren’t they willing to spend $10B. Seems silly they wouldn’t just buy it and use their golden touch. If AT&T and Verizon don’t want to play by Google’s rules they’ll be left behind.

  2. Trogdor says:

    Robert X Cringely spoke about this yesterday in his weekly column. He has two guesses as to what Google’s up to: 1) they’ve gotten too cocky and too removed from reality, and overestimated themselves; or, 2) they’re playing a smart game of poker, and maybe bluffing, maybe not …

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