Google to Bid For U.S. Mobile Airwaves

Google said Friday that it would bid on coveted airwaves to launch a U.S. wireless network, putting the search leader in competition with traditional telecommunications players AT&T and Verizon.

The company said in a statement that it was ready to go it alone rather than rely on partners in bidding in the Federal Communications Commission-run auction of 700MHz wireless spectrum due to begin on Jan. 24.

Google said it would make its official filing ahead of the FCC deadline on Monday for companies to declare their interest in joining the airwaves bidding.

“We believe it’s important to put our money where our principles are,” Chief Executive Eric Schmidt said. “Consumers deserve more competition and innovation than they have in today’s wireless world.”

Wall Street investors have reacted cautiously to Google’s latest move to expand beyond its core Web search and online advertising franchises, worried the potential upfront costs and eventual network build-out could exceed $10 billion.

But several analysts have speculated that Google was more interested in ensuring certain requirements for network openness and that it was bidding just to preserve those rules.

Google shares were down $3, or less than 1 percent, at $694 in morning NASDAQ trading.

Bidding separately instead of assembling a coalition does not rule out Google later signing up partners if it wins the bidding, said a source familiar with the company’s strategy.

The source said Google was eyeing the biggest chunk of spectrum up for auction — known as the “C block” — but also was considering bidding on separate spectrum reserved for public safety agencies but which will allow some commercial uses.

A Google spokesman declined to comment on the company’s bidding strategy.

Last Chance for New Player

Other expected bidders include AT&T and Verizon Wireless, the No. 1 and No 2. U.S. wireless network operators. Verizon Wireless is a joint venture of Verizon Communications and Vodafone Group.

These radio waves are being returned by broadcasters as they move from analog to digital signals early in 2009. The signals can go long distances and penetrate thick walls.

The auction is seen as a last chance for a new wireless player.

Google and other Silicon Valley leaders see the wireless spectrum as a way to create more open competition for mobile services and devices than existing networks — putting the industry on a footing similar to the free-wheeling Internet.

The company won some changes in rules governing use of the spectrum several months ago, but was denied other requests, including a rule that would have required winning bidders to resell access to their spectrum on an open wholesale basis.

The winning bidder must provide open access to any device consumers choose to use on the network if the reserve price of $4.6 billion for the “C Block” is met at auction, Google said.

If its bid proves successful, Google could operate a wireless network itself or seek partners to help it build out the network and to potentially resell wireless services.

Google’s announcement was greeted as good news at the FCC, said a source at the agency. “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.”

FCC officials hope the company’s participation will mean a possible new player in the wireless business and boost the amount of money the government can bring in from the auction.

“We know we’re going to have somebody in the mix who has a lot of money and who is showing signs in being interested in winning,” said the source.

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