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Google Will Bid In Wireless Spectrum Auction

Tech giant will "put our money where our principles are," CEO says

by Martin H. Bosworth
ConsumerAffairs.com

November 30, 2007 

"Consumers deserve more competition and innovation than they have in today's wireless world," Schmidt said. "No matter which bidder ultimately prevails, the real winners of this auction are American consumers who likely will see more choices than ever before in how they access the Internet."

As part of the shift from analog television to digital TV signals taking place in 2009, the FCC is auctioning off the 700mhz block to interested bidders.

Google agreed to put up $4.6 billion for the auction if bidders agreed to adhere to its proposed principles for use of the spectrum, including enabling any device to connect to any network using the spectrum.

Telecoms such as AT&T and Verizon, also interested in the spectrum, opposed Google's open access principles, and the FCC passed compromise rules that did not fully adopt Google's proposals, but did include the "open device" standard.

The Wireless Chess Game

Google's official commitment to bid in the auction comes several days after Verizon Wireless announced it would open its network to enable compatible devices and software to work with Verizon Wireless, even if the applications came from other providers or manufacturers.

Verizon, which had been one of the most ardent proponents of the "walled garden" approach to its network, had tried to sue the FCC in order to lift the "open device" requirement of the auction, but later withdrew the suit. Its reversal of policy in adopting an open network was hailed as an innovative move, but a closer look revealed that Verizon may not be changing its stance completely.

Verizon's network runs on the CDMA standard, as opposed to the more widely used GSM standard, meaning that only CDMA-enabled phones can work on the Verizon network. Although Sprint also uses the CDMA network, Verizon's biggest rival AT&T uses GSM, meaning the dream of an iPhone on Verizon is still far off.

TechCrunch's Erick Schonfeld also reported that third-party applications developed for new phones compatible with the Verizon network would not be available to existing customers who bought phones through Verizon.

"Unless it figures that out, Verizon is not really building an open network," Schonfeld wrote. "It is building a two-tiered network: One for its preferred customers who play by its rules...and one for the rabble not satisfied with its choice of phones and apps."

The Next Move?

Insiders speculate that Verizon may have made the commitment to open networks chiefly to prevent the FCC auction from instituting tougher rules regarding open usage of devices, much as it led the wireless industry in committing to cutting termination fees to prevent Congress from passing laws outlawing the practice.

Google, meanwhile, has already raised the stakes with its Open Handset Alliance, a coalition of wireless and technology providers who are working together to support Android, Google's open mobile platform. Partners in the Open Handset Alliance include mobile players such as Sprint and T-Mobile and handset manufacturers such as Motorola, Samsung, and LG.

Given the dizzying twists and turns in the chess game over the wireless spectrum, the next moves are becoming increasingly difficult to predict--but they promise to be interesting.

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