Google in the running for wireless spectrum

January 16, 2008

The 700-megahertz spectrum can go long distances and penetrate thick walls

Search giant Google Inc. made the list of companies that the Federal Communications Commission cleared to bid in the coveted 700 megahertz wireless auction.

The FCC approved 214 potential bidders. It’s not a surprise that Google made the short list, said Neil Strother, analyst for JupiterResearch, New York.

“Google could conceivably offer data services that are ad-supported,” Mr. Strother said. “It could partner with handset makers and give away devices and services in exchange for viewing ads.”

Market-watchers have known for months that Google would participate in this auction. Many theories have been tossed around in the media, such as ad-supported gPhones. But until Google, listed as Google Airwaves on FCC documents, actually wins a license, the wireless industry can only speculate as to what it might do.

Google could also do a mixed model – “some subscription fee, some ad-supported, some payment for devices,” Mr. Strother said.

Google may shake up the carrier business

The 700-megahertz spectrum is valuable because its signals can go long distances and penetrate thick walls. The spectrum is to be auctioned off in several different blocks, ranging from smaller regional blocks to large, nationwide ones. 

“If they win… then Google has to decide what to do with that spectrum: build a network, partner and build one, stand pat until forced by the rules to do something with it. Or sell it,” Mr. Strother said.

The auction is scheduled to begin Jan. 24. Some analysts have said the auction is the last opportunity for a new player to enter the wireless market.

The list of qualified bidders also included AT&T Inc. and Verizon Wireless – a joint venture of Verizon Communications Inc. and Vodafone Group plc – as well as ventures involving EchoStar Communications Corp., Cablevision Systems Corp., Qualcomm Inc. and Microsoft Corp. co-founder Paul Allen.

All companies that have been cleared to take part in the auction made a required upfront payment ranging from several thousand dollars to more than $100 million, depending on the size of the license a company is seeking.

If Google moves ahead with a network it adds a powerful new player to the wireless industry.

Google executives have indicated in media reports they do not necessarily want to run a network. So partnering with another company down the line is likely if Google does win a piece of the spectrum.

The most difficult part for Google will be acquiring and keeping customers against four national wireless carriers and some regional ones providing voice and data services.

“It's a competitive landscape, and sure it could be shaken up, but running an ongoing carrier business is not a trivial thing and not part of Google's DNA,” Mr. Strother said.