Google wasn’t kidding. After months of comments by company executives that the search giant would “probably” bid in the government’s 700MHz spectrum auction, Google made its intentions to proceed official today.
“We believe it’s important to put our money where our principles are,” CEO Eric Schmidt said in a statement.
And a lot of money it is. The auction, scheduled for Jan. 24, 2008, carries a minimum bid of $4.6 billion for the spectrum’s hotly contested “C Block” portion.
Google said it plans to file the formal application for its bid on Monday, Dec. 3.
Clearing up another aspect of its plans, Google confirmed that it would make the bid alone, without any partners. Previously, Google had said it had received numerous inquiries from potential partners and said it was considering teaming up with one or more other companies to make a joint bid on the spectrum.
Even if Google wins the spectrum, it may ultimately have no choice but to partner, some analysts say.
“Google’s not a nationwide carrier, and I imagine it would be difficult to run the network on their own,” Priya Mehra, managing consultant in Capgemini’s telecommunications media and entertainment practice, told InternetNews.com. “They could look to work with some of the regional telcos. It would also be a good strategy to partner with the cable guys where there are already advertising relationships.”
The spectrum auction seeks to allocate space becoming available through TV broadcasters’ transition from analog to digital signals, which is freeing up bandwidth in the 700MHz spectrum.
Google’s interest in a piece of the action puts it in contention with established mobile telecom players like AT&T and Verizon Wireless, both of which are expected to bid next month. While the move might seem unusual and risky for an online play like Google, the effort comes in part as a result of the 700MHz band’s increasing usefulness to Internet firms.
For one thing, the band is highly sought-after because it’s considered ideal for delivering advanced wireless services, including broadband that meets or exceeds the speeds of DSL or cable modems.
Additionally, the FCC has been working to foster increased competition in the market, stipulating auction rules designed to encourage Internet firms to bid.
Under the FCC plan, more than a third of the spectrum for sale — enough to build a national network — would be reserved for an open-access platform that would allow consumers to connect any legal device or software to the network. Carriers would also be prohibited from blocking legal Internet content.
Not surprisingly, dominant incumbent carriers loudly complained that open-access mandates would rig the auction in Google’s favor. AT&T CEO Randall Stephenson also said last month whether his company would bid on the spectrum would now come down to whether the telecom giant can figure out if it’s worth the expense.
“I don’t know if you can make money providing open access,” Stephenson said. “Can someone go in and bid the reserve prices of $4.6 billion and then [afford to] build a network? … It’s an interesting question.”
Stephenson said at the time he thinks the spectrum will be open to others regardless of who buys it, and expects AT&T to participate.
“It’s the best spectrum you’re going to see for a long time,” he added.
Earlier this week, Verizon Wireless, the No. 2 U.S. wireless network operator after AT&T, bowed to pressure and said it would abandoned the lawsuit it had filed a month earlier against the Commission over its open-access requirement.
Google’s decision to participate was greeted as good news by the FCC, according to a source at the agency quoted by Reuters. “It means that they’re willing to go a little bit further into the water,” the source said. “They’re not just dipping their toe anymore.”
The heightened competition in bidding could also result in more money in government coffers. The bidding will be done electronically and anonymously over several rounds, according to the FCC. The auction will end when there are no new bids and all the spectrum blocks have been sold, a process that could carry over into March.
Mehra, meanwhile, said she thinks Google would have been far less interested in bidding on the spectrum if the carriers had shown more interest in opening their networks.
“They want to own the customer relationship, what’s allowed on the network, the billing and so forth,” Mehra said. “Now we’re seeing Verizon open up and Google’s bid, which is all good news for content providers.”
In any event, the spectrum auction will serve as but the latest move by Google into the mobile sector. According to one report, Google already operates an advanced, high-speed wireless network at its Mountain View, Calif. headquarters under a test license from the FCC.
The report said Google has erected transmission towers on its campus for the network and uses prototype mobile handsets powered by its recently released Android software, which the company is positioning as a new, open mobile handset operating system.