Google Commits $4.6 Bln to Wireless Auction

In an uncharacteristic move, Internet giant Google has informed FCC chairman Kevin Martin the company will commit at least $4.6 billion to the FCC’s upcoming spectrum auction in the 700 MHz band—so long as the FCC requires auction winners adhere to four princples of “openness” which designed to encourage competition and consumer choice.

Google announcement is apparently the company’s way of “putting its money where its principles are,” citing concerns in its public policy blog that the federal government’s allocation of wireless spectrum licenses has been inefficient and on the effect of creating a duopoly in regard to broadband Internet access: basically, for most Americans who want broadband, the only options are cable and phone companies—and franchise agreement lock many people into only one of each.

Google proposes that the FCC mandate four principles of “openness” in auctioning the 700 MHz spectrum space: the auction is part of the nationwide transition to digital television, and enables technology which can be used to offer wireless broadband services. Google argues the four principles would encourage competition amongst application developers, content providers, handset makers, ISPs, and other companies; this competition, in turn, would give consumers a wider choice of broadband services and providers.

The four openness principles Google wants the FCC to require are:

Open applications: consumers should be able to download and utilize any software applications, content, or services they like;
Open devices: consumers should be able to utilize their handheld communications device with whichever 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 ISPs) should be able to interconnect at any technically feasible point in a 700 MHz licensee’s wireless network.

The $4.6 billion figure is the reserve price the FCC has proposed for the 700 MHz spectrum auction. By guaranteeing that reserve price—so long as is requirements are met—Google is hoping to take pressure off the FCC to maximize bids from communications operators, who (it’s generally believed) would operate closed services in the spectrum space, should they win it at auction, meaning they would act as sole gatekeepers for applications and services available on the spectrum.

Although Google’s move is bold—and FCC chairman Martin has already indicated some willingness to consider openness requirements in the 700 Mhz spectrum—the FCC is not likely to influenced by a guarantee of the spectrum’s reserve price, and Google isn’t likely to be forced to shell out the money. In all likelihood, the 700 Mhz spectrum will sell for far more than $4.6 billion—and if the FCC were to adopt Google’s principles, it could be accused of having bowed to pressure from an outside interest.

Instead, Google’s move is a way to put public pressure on the FCC, and raise the issue of openness in the forthcoming spectrum auction in the public eye. So far as that’s concerned, Google’s $4.6 billion may well be money well un-spent.

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