Google announced this morning its intention to bid in the upcoming 700 MHz wireless spectrum auction, which is being touted as one of the most important communications auctions in American history. The company said it’s willing to bid a minimum of $4.6 billion.
Why $4.6 billion? That is the reserve price the FCC has set for the 22 MHz “C” Block in the Upper 700 MHz Band – pejoratively labeled “the Google Block” by rival phone companies like Verizon.
With this promised bid, Google has taken away arguments from incumbent telecommunications opposition that openness requirements would devalue the spectrum and limit competition.
The pledge carries with it stipulations, though. In a letter to FCC chairman Kevin Martin, Google CEO Eric Schmidt said it would only bid if the FCC adopted all four proposed openness requirements as part of the license conditions.
The four requirements are:
· Open applications: Consumers should be able to download and utilize any software applications, content, or services they desire;
· Open devices: Consumers should be able to utilize a handheld communications device with whatever wireless network they prefer;
· Open services: Third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and
· Open networks: Third parties (like internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee’s wireless network.
By ensuring a slice of spectrum remains open, proponents hope incumbents will be prevented from buying up the spectrum, formerly used by broadcast television and ideal for true wireless broadband Internet, hoarding it and doling it out in a way that is costly and unfair to consumers.
“In short,” said Schmidt, “when Americans can use the software and handsets of their choice, over open and competitive networks, they win.”
Chris Sacca, Google’s Head of Special Initiatives, expands on this concept on the Google Public Policy Blog:
As numerous public interest organizations noted earlier this week, all four of these conditions adopted together would promote a spirit of openness, and could spur additional forms of competition from web-based entities, such as software applications providers, content providers, handset makers, and ISPs. The big winners? Consumers. As choices increase, prices come down and more Americans have access to the Net.
Google is sitting on a mountain of cash. Yesterday, the company reported $12.5 billion in cash holdings in their second quarter earnings report. In the past, Google has had to be careful with how its money is allocated, as the SEC has threatened to change their classification status to “investment fund.”
Dropping as much as $5 billion on spectrum would help control for concerns like that, and move the company into the long awaited ISP everyone (ahem, almost) knew it would become.
