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Google Plans to Bid 4.6 Billion on 700MHz Band
Posted by
Zonk
on Fri Nov 16, 2007 09:23 AM
from the dude-you've-been-googed dept.
from the dude-you've-been-googed dept.
NickCatal writes "The Wall Street Journal is reporting that Google plans to bid $4.6 Billion on the 700 MHz radio spectrum being auctioned off by the FCC. What is most interesting is that they are not planning on partnering with other companies to raise the cash, they are going to spend their own cash and possibly borrow some. With partners such as Sprint Nextel and T-Mobile in their 'Open Handset Alliance' is this a sign that they are willing to directly compete with the people they courted to join?"
Related Stories
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Hardware: Google et al. Want 700 MHz Auction Opened Up 170 comments
The 700 MHz spectrum could give birth to the much-anticipated third pipe, but phone and cable lobbyists are currently pressuring the FCC to sell companies like AT&T and Verizon our airwaves — in a flawed auction process — so they can hoard this valuable spectrum and stifle competitive alternatives to their networks. Google and other would-be providers are not taking it lying down. They want the FCC to mandate that whoever wins the auction be required to sell access to those airwaves, at wholesale prices, to anyone wanting to provide broadband Internet service. They also want anonymous auctions to prevent the giant incumbents from manipulating the results against small players (as they have done in the past).
[+]
Hardware: Senate Discusses Third Pipe Using 700MHz Spectrum 78 comments
Freebird writes "The US Senate Commerce Committee held hearings on the upcoming 700MHz spectrum auction today, and much of the discussion centered around Frontline Wireless' proposal to create a commercial wireless broadband network that would also be used for public safety. 'Under Frontline's proposal, the FCC would auction off 10 MHz from the commercially available spectrum and offer that to the highest bidder. The winner would also be given (free) 12 MHz out of the 24 MHz currently allotted to public safety.' Some senators were skeptical, especially Ted Stevens of Alaska who had a 'long and testy interchange' with Frontline CEO James Barksdale. 'He seemed to be zeroing on criticisms that the Frontline proposal was simply a way for a new company to get a huge discount on a prime chunk of spectrum by playing the "public safety" card.'"
[+]
Technology: Google Ready to Bid on 700 MHz 142 comments
Seppanen Style writes "The 700MHz spectrum auction looks like it's going to be heated. Google CEO Eric Schmidt has all but confirmed that Google will make a play for the spectrum that will be on offer next January. 'In effect, this could give Google control of the entire pipe between customers and Google servers, a move that could be very good for business strategy, even if the wireless network is not a major profit center. Companies never like to be at the mercy of other companies, and Google is no exception.'"
[+]
The 700MHz Question 148 comments
mstrchf07 writes "The FCC will soon be auctioning off the rights to use the 700MHz spectrum for wireless communications, with the winner being able to choose the direction of wireless services development in the US. With stakes this high, is the playing field fair, and are business needs trumping consumer and technological interests?"
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Shocking!!! (Score:2, Insightful)
Re:Shocking!!! (Score:5, Funny)
Because if you bid $4,600,000,000.01 you get the license and not Google.
Parent
Re: (Score:3, Interesting)
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Most regional license for few a few million. We are talking 4.6 billion here.
f me thats a lot of money (Score:2, Funny)
Re:f me thats a lot of money (Score:5, Funny)
I think Sergey is going to sell 100 shares.
Parent
Re:f me thats a lot of money (Score:5, Informative)
Parent
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Re:f me thats a lot of money (Score:5, Informative)
With a market capitalization of nearly $200B, no debt, and a 22% return on equity, Google should have absolutely no problem raising cash if necessary. I suspect they will tap into their cash reserves rather than debt financing or raising capital by diluting existing shareholder equity.
The numbers are here:
http://finance.yahoo.com/q/ks?s=GOOG [yahoo.com]
Parent
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I imagine that RF spectrum is an asset that they could liquidate very easily if needed. It's not going to get any less valuable while they're holding onto it, and as long as they don't overpay, it very well may appreciate in value.
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I think the opposite is true. You'd be amazed how much spectrum has been opened up and has been bought up cheaply because the big players are waiting for the lower frequency stuff to become available. We haven't heard that much about it because the technologies being deployed, WiMAX and UMTS-TDD, are still in their infancy, and because with the exception of Sprint (which is rolling back its WiMAX plans anyway) no big names with big budgets are involved.
We're going to see a spectrum glut over the next few
Re: (Score:3, Funny)
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Of course not! It's just spectrum isn't going to be the major issue affecting bandwidth use over the next few years; creating low power technologies capable of processing the information quickly enough is more likely to be the major factor. And yes, technologies improve, but operators also have to keep making cell sizes progressively smaller as they fill in coverage holes, effectively creating more bandwidth without increasing spectrum usage.
And I haven't even covered the huge increases in unlicensed wir
Re:f me thats a lot of money (Score:5, Insightful)
Parent
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Re:f me thats a lot of money (Score:5, Insightful)
The FCC isn't going to do that. Now their primary function is to steal the radio spectrum from the people and auction it off to the highest bidder.
I'm beginning to think there is no point following FCC rules. If the government is going to be greedy thieving bastards with our radio spectrum, why not just become freebanders? WTF? I thought the FCC was supposed to regulate the airwaves for everyone's benefit? If they just take them away to sell them, then they are just another scheme by the corrupt goverment to separate the citizens from their rightful use of public commons and get money out of it.
Parent
Re:f me thats a lot of money (Score:4, Informative)
The FCC shot down two of the four suggestions, but the network transparency provisions stayed in. I'm holding off on buying a new phone for a while because if I can get a device (from any carrier) on this frequency I know I'm not locked in by the technology according to the conditions of sale.
Verizon and Sprint are fighting this condition in a lawsuit against the FCC.
Parent
maybe compete, but I don't see google (Score:5, Insightful)
Most likely it'll involve them leasing out the band to other users to prevent a monopoly. Maybe giving a discount to users of Google's cell phone tech and/or adding special features that (by owning the band) it can ensure will be available anywhere there is a tower that handles the band.
Re: (Score:3, Insightful)
Some carriers have privately expressed skepticism about Google's ambitions, saying it is vastly underestimating the challenges of operating a network, providing customer service and gaining traction as a new entrant in a crowded wireless market.
Forget Google! The existing carriers continue to underestimate the challenges of operating a network. I have friends spread out across many carriers where I live (Sprint, Verizon, Deathstar), and I've gotta say, the customer service still sucks mig
why? (Score:2, Interesting)
Re:why? (Score:4, Insightful)
There'll be many "rounds" of bidding. The initial bid is just to see who's interested. After that, the stakes will rise with each interested party desperately trying to squeeze more finance out of their partners/banks/owners to raise their bid.
At some point one will either not be able to raise any more ca$h and quit the bidding rounds, while the other go on. Some will realise that at the price they will have to pay, their business model breaks and they won;t make any profit.
Eventually someone will "win", but this will be a phyrric victory as the amount of money they will have to pay for a licence will be so high that they'll either go bankrupt, have to join up with some other bidders (who pulled out earlier) or not have enough monkey left to actually build the systems they wanted to implement.
Parent
Re:why? (Score:5, Insightful)
The whole system fucking sucks. Why exactly are AT&T and Verizon even allowed to take part in this auction? Both of them have TONS of spectrum in the cellular, PCS and even AWS bands. Why is there no justification process attached to bidding on a limited resource and no mechanism in place to keep greedy monopolies from hoarding all of the spectrum to shut out newcomers?
Did you know in some markets that AT&T holds over 75% of the available cellular and PCS spectrum? They justified this back in the day by claiming that they needed to run three networks -- AMPS (analog), TDMA and GSM, even as they were forcing their customers to vacate the old AMPS and TDMA equipment.
I find it depressingly ironic that I have to fill out paperwork to justify my IP requests to ARIN, but a far more limited resource that theoretically belongs to everybody is just auctioned off to the highest bidder with no consideration as to whether or not it's in the interest of the public. Hell, even the limited "open access" rules that have been purposed are even being fought by Verizon, because they'd rather lock you into their hardware, their content and their service then allow an open market to flourish.
Parent
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Yeah, I hate it when I go to build something and realise that I've run out of monkey.
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Re:why? (Score:5, Informative)
Parent
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Not an Act of War (Score:5, Insightful)
The band that a company owns seems to be a completely different business investment.
Case in point, when a company 'joins' the World Wide Web Consortium [w3.org], it isn't considered unfriendly for them to go buy another T1 line for their company or even purchase software from a company who doesn't support W3C.
And the reason I hesitate to use the word 'joins' is that when a standard is truly open, you don't have to join to use it. Hell, you really shouldn't even be forced to use it forever. It's open. It's out there for anybody to use or to stop using. That's what attracts me to open standards. I haven't paid IBM or signed an agreement with Microsoft whereby if a new technology arises I have to wait for the agreement to wear off.
You shouldn't have to 'buy in' to the Open Handset Alliance and I think you're thinking of it in the wrong way when you imply that it's detrimental by not going in with other members on this auction from the FCC.
If they did a good job making the standards and you don't have to commit to it, other companies will want to use it. They aren't going to care if Google is still trying to make a profit in other realms. Just because Google made an open standard for everyone to use doesn't mean they now need to sit back on their heels and be ultra careful not to upset anyone--and the other companies know this. Hell, everyone needs to make a profit.
Not so much competing against (Score:3, Insightful)
My bet (Score:3, Interesting)
More likely.... (Score:3, Interesting)
But if a telco chooses to "play nice" and open their network to the OCA based, presumably uber-cool handset and applications, folks may just stay with an existing provider and then both Google and the Wireless provider both get to make buckets of $$$.
$ for citizens (Score:5, Insightful)
Re: (Score:2)
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I want to see all this money, plus *all* of the money from the sale of the television spectrum following the HD deadline, to come back to us as a fat check to pay for one day in Iraq.
It's part of the government (Score:4, Informative)
Parent
stop the spectrum tax on the airways (Score:5, Interesting)
No wonder providers lock out third party handsets. They just paid billions for the spectrum, they have every incentive to maximize profits.
What would be most beneficial to the consumer is perhaps a company that just sold mobile IP addresses and had nothing to do with selling devices. Let consumers choose their own devices in a competitive market for the bandwidth they purchase. Maybe the FCC should stop thinking about billions of short term dollars and start thinking about what's best for consumers and the industry as a whole.
Competition Alliance (Score:2)
And Google has been planning to spend $billions on the 700MHz band to compete with them all for years.
This story isn't stupid, but the question it asks to frame it is so stupid I'm surprised I didn't see it on TV news.
The Hot FM. (Score:2, Funny)
reading voice mail (Score:3, Funny)
Battle plans...? (Score:2)
Business stopped being that simple, oh...like maybe 1 or 2 thousand years ago.
Does the phrase 'embrace and extend*' ring a tiny bell?
No? Try looking at it this way. MS constantly wages FUD. Always - frequently with whatever legal club happens to be within easy reach. Google, on the other hand does things in a rather novel manner (TIC) via the use of something called 'logic'. It's a more mature strategy (
Mr. Cringely has been saying this for a while... (Score:2)
A free, ad-supported Google cell service with GPhones would be pretty cool for you guys over there, I guess. Some people might be a bit wary of Google's dominance, but I suppose they'll still be blinded by Google's "Do No Evil" to think about how much Google already know/control. From my point of view, I'd just like people to be aware of how powerful they are - I've not made my mind up
Ticking time bomb for the old media (Score:5, Insightful)
Google has proven that the monopoly of distribution can be broken by their network, and their applications. AdSense replaces expensive marketing and advertising departments, Blogger.com replaces the need for physical media and the costs associated. Google Search replaces direct advertising campaigns, and YouTube is trumping the cable networks in giving people a la carte entertainment at a moment's notice. I have high hopes that Google's foray into the wireless market will offer huge gains for those of us who are sick and tired of the old media cell phone technology (locked phones, expensive monthly charges, limited application support, etc).
As WiFi exploded in use, I continued to be amazed at how relatively unregulated bandwidth worked so well in all the market locales I had WiFi implemented in. Yes, I've heard horror stories by relatively few, but in my office in downtown Chicago, our WiFi network worked seamlessly with dozens of others in the same building. Up to now, I still can't find verifiable proof that other wireless bandwidth segments can't be shared by dozens, or hundreds, of providers in the same vicinity. With the advent of software radios (frequency hopping, output power changes, etc), it seems that the first person to relinquish full control of their bandwidth nation-wide will really hurt the old media strangehold in the wireless market.
My biggest fear for wireless is the push for more laws to regulate "network neutrality," which I am against vehemently. I believe that paying for access tiers makes more sense than forcing the market to all stay at a certain level of service for everyone at a flat price. It doesn't make sense to me (neither as a businessman, nor as an individual). I'm hoping to see Google offer the bandwidth in markets they can't reach in a relatively unregulated and openly competitive atmosphere. In an adjoining town to mine, Libertyville, Illinois, there are numerous WiFi Internet providers who are doing gangbusters sticking access points on leased towers and giving people in the region what they want (including even free WiFi at a throttled speed) at the price they're willing to pay. The old media companies (AT&T, Comcast, etc) have fought tooth and nail to shut down these hooligans, but the city has held its ground in allowing them to compete. My own town won't allow this to happen (although we do have a bunch of WiFi sharing groups on within 2 blocks of me), so I'd love to see a national push by a major new media company to open bandwidth for all to play with to see what the market can provide with reduced FCC rules created by the old monopolists.
My big concern is the names Sprint and T-Mobile associated with the post. I use T-Mobile for 60% of my wireless communication (mostly EDGE and voice), and AT&T for the remainder (3G), and while I'm happy, I also use unlocked foreign phones and hardware devices. My friends who use the locally provided versions of the same devices are really unhappy, and don't have anywhere near the amount of customization and freedom that I get by providing my own (expensive) devices.
I do see a big WMD for the old media ahead, ready to explode. It's called competition, and it will come from all levels: locally, nationally, internationally. I've spent more time on YouTube in the past 2 weeks than watching TV in the past 6 months. I'm prepared with my wallet to pay in advance for broadcasts I like (such as Sanctuary, which I feel isn't there yet), and I can't wait to see what foreigners with a great grasp of English start producing with the technology available. Combine that with a relatively cheap and open range of bandwidth frequencies, and the radio/tv/cell monopolists are dead.
I can't wait. Who do I write a check to at Google?
Re: (Score:3, Insightful)
My biggest fear for wireless is the push for more laws to regulate "network neutrality," which I am against vehemently. I believe that paying for access tiers makes more sense than forcing the market to all stay at a certain level of service for everyone at a flat price. It doesn't make sense to me (neither as a businessman, nor as an individual). I'm hoping to see Google offer the bandwidth in markets they can't reach in a relatively unregulated and openly competitive atmosphere. In an adjoining town to mine, Libertyville, Illinois, there are numerous WiFi Internet providers who are doing gangbusters sticking access points on leased towers and giving people in the region what they want (including even free WiFi at a throttled speed) at the price they're willing to pay. The old media companies (AT&T, Comcast, etc) have fought tooth and nail to shut down these hooligans, but the city has held its ground in allowing them to compete. My own town won't allow this to happen (although we do have a bunch of WiFi sharing groups on within 2 blocks of me), so I'd love to see a national push by a major new media company to open bandwidth for all to play with to see what the market can provide with reduced FCC rules created by the old monopolists.
You do not understand what network neutrality is. The issue is not whether providers can offer can offer different tiers of service for different prices. Of course they can -- they do it now and will continue to do so in the future. The question of network neutrality is whether, after you pay for a certain level of service, the ISP can vary your service based on the destination or content of a given packet. The canonical example is internet service provided by a telco choosing to block or cripple VOIP
Hey, Who Announces Ahead of Time... (Score:2)
I'd like to see Google win this. They are the only hope for some serious competition in this consolidating business of access to the InfoBahn (remember that term that once ca
beam ads directly to brain (Score:3, Funny)
Re: (Score:3, Interesting)
The german mobile auction in 2000 raised over $50Bn (at today's exchange rate). The UK auction in 2001 raised £22.5Bn ($45Bn at todays rate)
These auctions are more profitable than wars - well, for the governments involved. Not for the poor suckers who "win" them and then have to find the cash
references:
http://news.independent.co.uk/business/news/article272264.ece [independent.co.uk]> http://www.nao.org.uk/publications/nao_reports/01-02/ [nao.org.uk]
Re: (Score:3, Informative)
MVNO = Mobile Virtual Network Operator
"bi doin" = be doing (I think?)
OK, let's try that, and a few more fixes:
Well, it still doesn't make sense.
Let me rephrase entirely:
Google intends to lease the