Google On Wireless Auctions and Spectrum Use: Worth Reading

Google just posted a lengthy explanation of its position with regard to an upcoming government auction in the 700mHz spectrum. It’s fascinating reading, and one of the reasons I’m having Reed Hundt, of the Google-supported Frontline Wireless, coming to Web 2 to speak this Fall.

In short, Google claims that it’s most likely that the incumbent telcos and cable companies will win the auction, simply to insure they don’t have any competition.

From the post:

Over the last several weeks, we’ve been taking a closer look at whether and how Google might participate meaningfully in the auction. As part of that look, we’ve consulted with spectrum auction experts and conducted various game theory scenarios. Our analysis has confirmed that, under the originally proposed rules, the existing national wireless carriers are likely to prevail in the bidding process against a potential new entrant like Google. While we remain interested in the possibility of participating in the auction, it’s clear that the incumbent carriers have built-in advantages that will prove difficult to overcome (particularly the economic and operational barriers to entry for a company like ours, and the relatively greater value and usefulness that spectrum brings to existing carriers).

What would happen if one or some of the existing national wireless carriers win this valuable spectrum at auction? They would probably use it to protect their existing business models and thwart the entry of new competitors — both understandable actions from a rational business perspective. Beyond the loss of a valuable public resource, however, that outcome would not bring us any closer to fostering much-needed competition in the broadband market, or providing innovative new web applications and service offerings.

Google is now lobbying the government asking that whoever wins be regulated to insure openness:



Late yesterday, we filed a letter urging the FCC to take concrete steps to make sure that regardless of who wins the spectrum at auction, consumers’ interests are best served. We believe that the winning bidders should be required to adhere to enforceable rules that require the adoption of four types of “open” platforms:

Open applications: consumers should be able to download and utilize any software applications, content, or services they desire;

Open devices: consumers should be able to utilize a handheld communications device with whatever wireless network they prefer;

Open services: third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and

Open networks: third parties (like internet service providers) should be able to interconnect at a technically feasible point in a 700 MHz licensee’s wireless network.

It’s interesting to note that while Google seems to be strike fear in nearly every player in the media and technology business, the same does not apparently hold true for telecom.