Google readies $4.6b cellular investment with broad openness provisos

MY iTablet forum member modmesilly flagged up a couple of Google-phone related articles for us this weekend, which give a few hints as to the search company's intentions come the wireless spectrum auction in which chunks of radio frequency currently used for analogue TV will be freed up by the switch to digital. There's no doubting that Google has the financial backing to invest - they're claiming to have at least $4.6 billion ready to pump into it - but they're not exactly playing the normal auction game.

Where traditional wireless carriers such as AT&T and Verizon (also expected to bid) are relatively content to wait for the spectrum to become available, Google has demanded a few provisos from the FCC. Namely, it's looking for "openness" in the same manner as net-neutrality: any company would be free to make hardware and software products that would work on the network.

Google also want to see wholesale access rates for smaller communication firms that they could then resell, in effect making it more easy for startups like Helio - an MVNO which does not have their own network but instead buys access from an existing telco - to introduce new options for customers. They seem pretty adamant, too; Richard Whitt, who is the telecom and media counsel for Google in Washington, is pointing to the provisos as potential deal-breakers:

"If there is no openness requirement there, Google won't go"

The competing carriers lack Google's enthusiasm, however. A spokesman for CTIA called it a "scheme to have the auction rigged" while Verizon called the conditions "corporate welfare for Google". They may have a point; unlike the relatively open nature of online advertising and product positioning, the wireless industry is ruled by a small number of operators who cautiously - some might say jealously - limit the amount of external input from others. It's a market Google has had less success engaging, leading to rumours that they are planning their own Google-based cellphone with calls and line rental subsidised according to some form of their traditional advertising plan.

Actually, word from inside Google is that, if they won, they would be more likely to leave others to operate wireless networks. It's a move that obviously threatens the existing financial model of current carriers, as would the proposed openness clauses should they be adopted and even if Google were not to win:

"Google’s filing urges the F.C.C. to adopt rules that force all bidders to implement Google’s business plan — which would reduce the incentives for other players to bid" Thomas J. Tauke, Verizon

Whoever wins, with the coffers of the government predicted to swell by more than $10 billion from the proceeds of the auction it'll be an expensive investment. What will be perhaps most important are the services on offer, else customers will be slow in coming.

[via The Boston Globe and New York Times]

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