Now Google wants to be a telco

Over the weekend, the giant web company disclosed that it will be a bidder in the upcoming auction of a swathe of US wireless spectrum. Google says it is willing to bid at least US$6.4 billion as it seeks to become a mobile operator, but will do so only if the Federal Communications Commission (FCC) accepts and imposes a set of rules that would certainly be favourable to the search engine company but that have already been flatly rejected by other, established cell phone operators. Google's gambit is to put pressure on the FCC in the remaining few days before the regulator published the parameters under which the tranche of 700MHz spectrum, newly freed-up by TV broadcasters going digital, will go on the slab. The auction itself will take place in January 2008. The established US wireless carriers are understandably wary of what Google is up to and deeply suspicious of its motives. Verizon Wireless has dismissed Google's demands as "tantamount to corporate welfare" for the search engine company while AT&T refers to Google's "requirements" if it is to join the spectrum auction as an "all or nothing ultimatum" that should be ignored. Meanwhile, Steve Largent, the head of the wireless industry trade group the CTIA says Google is trying to get the auction "rigged with special conditions in its favour." AT&T and the others do have some friends in high places in this regard. Kevin Martin, the chairman of the FCC, has himself already refused two of Googles four proposed "conditions". However, Mr. Martin has also indicated that he has some sympathy with Google's two remaining "suggestions" and so the door to the auction room remains ajar. In point of fact, Google has already spent millions of bucks on mobile technology in an effort to be ready quickly to go beyond the mobile search and mobile map services it currently offers. However, the company has been reticent on exactly what it plans to do and only last week CEO Eric Schmidt, in a presentation to Wall Street analysts, parried questions about the company's mobile ambitions with the bland and non-commital response, "We are looking carefully at wireless and are thinking about what we want to do there." Yeah, well, we knew that much already. Pressed on the issue, Mr. Schmidt did go so far as to stress that Google considers it of prime importance that a network should permit any device to have access to it, and those devices should provide users with a portal to the complete Internet rather than a subset of it. To knowing nods and winks, the CEO added that were such circumstances to pertain, mobile phone subscribers would become "significant consumers" of online advertising on a cellular handset. Lest we forget, online advertising is Google's core business and the company's bread and butter and the Google would be delighted if it could subvert the existing mobile business model and subsidise both voice and data calls by advertising. Thus the company's vision of the wireless future is very much at odds with that of the established operators. Google looks forward to the day when consumers will be able to buy a handset at almost any kind of retail outlet and would then be free to sign-up with any mobile operator and put any software from any source onto their cell phones. Such a notion is absolute anathema to the likes of AT&T and Verizon who are determined to maintain the lucrative (for them) status quo. It seems likely that the FCC's decision on the rules for the spectrum auction could determine the mobile and wireless Internet access landscape in the US for a generation.