Google offers $4.6 billion for "open" wireless

By Simon Aughton

Posted on 23 Jul 2007 at 13:18

Google has set aside $4.6 billion to invest in the forthcoming US wireless spectrum auction.

The Federal Communications Commission is set to sell off access to the 700MHz radio spectrum for the provision of wireless broadband services. Google said it will bid $4.6 billion for that spectrum, provided that the FCC adopts four criteria that Google believes are necessary to provide consumer choice.

"In the US, 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," says Chris Sacca, Head of Special Initiatives at Google. "With that in mind, last week, as the federal government prepares for what is arguably its most significant auction of wireless spectrum in history, we urged the Federal Communications Commission to adopt rules to make sure that regardless of who wins the spectrum at auction, consumers' interests are the top priority."

Specifically, the FCC should mandate: open applications, so consumers can download and use any software applications, content, or services they desire; open devices, so all handheld communications devices are compatible with all networks; pen services, so third parties can acquire wireless services from a 700 MHz licensee on a wholesale basis; and open networks, enabling third parties such as internet service providers to interconnect with 700MHz networks.

"As numerous public interest organisations noted earlier this week, all four of these conditions adopted together would promote a spirit of openness, and could spur additional forms of competition from web-based entities, such as software applications providers, content providers, handset makers, and ISPs," Sacca said. "The big winners? Consumers. As choices increase, prices come down and more Americans have access to the net."

The FCC is currently considering draft rules for the auction and, according to Google, it is believed to have adopted some these conditions.

Google CEO Eric Schmidt has written to FCC chairman Kevin Martin, outlining the company's position and dangling the $4.6 billion carrot.

"Why $4.6 billion?," Sacca rhetorically asks. "While we think that a robust and competitive auction based on these four principles will likely produce much higher bids, and we are eager to see a diverse set of bidders competing, $4.6 billion is the reserve price that FCC has proposed for the auction. With any concerns about revenue to the US Treasury being satisfied, we hope the FCC can return its attention to adopting openness principles for the benefit of consumers."

AT&T, which is expected to compete for the spectrum, was unimpressed by Google's trumpeting of consumer choice.

"Google has now delivered an all or nothing ultimatum to the US Government, insisting that every single one of their conditions 'must' be met or they will not participate in the spectrum auction," James W Cicconi, AT&T's senior executive vice president for external and legislative affairs, claims in a statement. "This is an attempt to pressure the US Government to turn the auction process on its head by ensuring only a few, if any, bidders will compete with Google."

The auction is expected to raise $20 million and must take place before 28 January 2008.