Google Plans to Bid 4.6 Billion on 700MHz Band

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?"

Shocking!!!

[pablo_max]

Didnt they say they would do this a long time ago? How is this a story again?

maybe compete, but I don't see google

[ByOhTek]

becoming a cell phone provider any more than an internet provider.

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.

Not an Act of War

[eldavojohn]

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?

Perhaps it's just me but I thought the 'Open Handset Alliance' merely strove to see a common development platform with standards in relation to code, transferring data & hardware. I don't think this suddenly warrants the companies to throw in their lot together and go in together on everything.

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

[faloi]

But not being restricted by the people they've partnered with. If they have the rights to the spectrum free and clear of entanglements from other companies, they aren't limited to a single carrier (or group of carriers) for their offerings. They also have a bit more freedom to play around in the sandbox. Likely the companies they've worked with in the past will get some preferential treatment, but it allows Google to have ultimate control (well, except for the FCC of course).

Re:why?

[petes_PoV]

because it doesn't work like that.

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.

Re:why?

[Shakrai]

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

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.

$ for citizens

[jshriverWVU]

Personally I'd like to know just as much where this 4.6+ billion dollars is going to end up. The FCC while not an official government body is still somewhat kind of part of the government. Will this money go back to the people since after all it's all our frequencies, we just choose to let the FCC govern it for us.

Re:why?

[Blahgerton]

The whole system fucking sucks. Why exactly is the radio spectrum even up for auction?

There fixed that for you. Gotta love our government, selling the people's property.

Ticking time bomb for the old media

[dada21]

The term "old media" is a semi-ad hominem style attack that I like to use against the previously monopolistic media, mostly TV, radio and newspaper. Yet that term holds true to any company that attempts to use the force of law to keep and protect monopolistic practices in any communications market, including cell phones and land lines.

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:f me thats a lot of money

[timeOday]

Do even Google have this kind of cash?

Do we as customers have that kind of cash? Whoever pays $4.6 BN for it is darn sure they'll turn around and charge even more for us to use it. I would rather see the FCC simply make up some non-interference rules and spare us all the expense.

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Re:Ticking time bomb for the old media

[philgross]

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 internet packets, since those compete with its core revenue stream. Without network neutrality, providers would be free to slow down or drop traffic to Google services while speeding up traffic to their in-house services.

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Re:f me thats a lot of money

[sowth]

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.

Re:maybe compete, but I don't see google

[Da_Biz]

From the article:
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 mightily.

The way text messaging is priced is nearly tantamount to highway robbery: it requires very little bandwidth, and I suspect that most people purchase plans with more than enough minutes to avoid overages. One would think that text messaging would be cheaper (easier on bandwidth), but the way "unlimited" messages are priced, along with outrageous charges for overseas texting, is ludicrous.

Data plans are only now approaching levels of pricing sanity--and I'm grateful for that.