Is Half Good Enough For Google?

Rules are rules, but who will the players be?

The Federal Communications Commission (FCC) this week announced
the rules for the landmark 700 MHz spectrum, but the presumed bidders for the airwaves are still sitting on the fence.

Incumbent carriers AT&T and Verizon, the frontrunners in the
handicapping, and Google, the speculative, well-heeled outsider that might
make a run for the spectrum, all said they would have to read the FCC’s fine
print before committing to the auction.

That fine print is written in the rules, which will not be published for several weeks; until that happens, the biggest game in Washington is bet hedging, particularly for Google .

After Tuesday’s FCC meeting, Richard Whitt,
Google’s Washington telecom and media counsel, coyly told reporters Google
never said it wouldn’t participate in the auction if its conditions
weren’t met, only that it would if the FCC met its preferred terms.

“It would have a more complete victory for consumers had the FCC adopted all
four of the license conditions that we advocated in order to pave the way for
the real ‘third pipe’ broadband competition that FCC Chairman Kevin Martin has
been touting,” Whitt wrote Wednesday on the Google blog.

Whitt added, “For our part, we will need time to carefully study the actual
text of the FCC’s rules…before we can make any definitive decisions about
our possible participation in the auction.”

Over the last several months, the search and advertising giant has conducted a
very public campaign to pressure the FCC into conditioning the sale of the
spectrum on open access principles and wholesale access and pricing for
smaller providers.

The Mountain View, Calif.-based Google even went so far as to say it would meet
the minimum bid requirement of $4.6 billion if its conditions were met. The
incumbents urged the FCC to reject such a notion and put the spectrum up for
the highest bidder, no strings attached.

The FCC agreed with Google on open access, stating that approximately
one-third of the spectrum available will be limited to bidders who agree to
allow consumers to connect any legal device and software to the network. The
agency ignored Google on the idea of mandating wholesale access.

AT&T also said it would have to read the actual rules before making a decision
but added the FCC had struck a “reasonable balance” between the positions of
the incumbents and Google.

“Time will tell whether Google is serious about bidding in the auction,” Jim
Cicconi, AT&T’s senior executive vice president, said in a statement. “As
we’ve previously noted, if Google is serious about introducing a competing
business model into the wireless industry, [the] compromise plan allows them
to bid in the auction, win the spectrum and then implement every one of the
conditions they seek.”

In an e-mail statement to, Verizon simply stated:
“We’ll have nothing to say until we read the order.”

Verizon was one of the few without a comment about the FCC’s spectrum rules.
Like many compromises, parties on both sides of the issue were less than happy.
Both the wireless industry and consumer and advocacy groups said the FCC did
not go far enough, but for different reasons.

“We are disappointed that a significant portion of this valuable spectrum will
be encumbered with mandates that could significantly reduce the number of
interested bidders,” Steve Largent of CTIA, the trade association for the
wireless industry, said.

“We remain committed to the principle that wireless
consumers and American taxpayers are best served when such a valuable
commodity is auctioned in a fair and competitive manner with no strings

The Consumers Union, though, wanted more strings attached.

Chris Murray, senior counsel for the group, said he was “heartened” that the
FCC chose to require a “limited degree of openness” on part of the spectrum.
Nevertheless, he said, it was too little, too late.

“The phone monopolies got most of what they wanted, and consumers will pay the
price,” Murray said in a statement. “Now customers are likely to see the same overpriced packages, lack of
innovation and undue fees with aggravating long-term lock-ins.”

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