Google to battle telecom giants for wireless Web

By Elise Ackerman
Mercury News


After weeks of playing coy, Google said Friday it will bid in the auction for a highly coveted part of the nation’s airwaves, setting the stage for a multibillion-dollar game of corporate poker that could determine who controls the wireless Web in the United States.

Other players include AT&T and Verizon Wireless, the two biggest cell phone companies, as well as Frontline Wireless, a start-up backed by venture capitalists John Doerr and Ram Shriram.

The reason for the interest: The auction run by the Federal Communications Commission is destined to be the last of its kind as similarly desirable spectrum is already spoken for.

“It doesn’t get any better than this for carrying signals through walls and carrying high volumes of traffic,” Randall Stephenson, chief executive of AT&T, said during a recent visit to Silicon Valley. “This is very important stuff.”

For sale will be portions of the 700-megahertz band that is slated to be turned over by broadcasters when they switch UHF television stations to digital transmission in February 2009. Monday is the deadline to register to bid, with winners to be announced next year.

Google in particular wants the spectrum to be used to create a wireless Internet that works much like the traditional Web. People would be able to use whatever devices or software they want, just as they can use a Mac, Windows- or Linux-based computer or something else to access the traditional Web, with a wide choice of browsers and other Internet software. Google’s executives, including co-founder Sergey Brin and Chief Executive Eric Schmidt, have repeatedly said the country’s closed wireless networks, in which the carriers maintain a lock on what devices and software customers can use, thwart innovation.

To try to change that, Google earlier this month unveiled an ambitious proposal to open up software development for mobile phones and, it hopes, spur a whole new wave of innovative applications.

In addition, Google lobbied hard over the summer with a coalition of public interest groups and technology companies to make sure the 700 megahertz spectrum up for auction would be used to create an open commercial network.

Google got half of what it wanted. In August, the FCC approved rules that require the winner of the auction to allow any device and any software application to run on the new network.

But the FCC added its own requirement. If the government did not receive a minimum bid of $4.6 billion, the FCC said it would redo the auction without the openness requirements.

Schmidt on Friday said in a statement that the Mountain View giant had decided to participate because “we believe it’s important to put our money where our principles are.” Schmidt said Google would bid alone.

But Google’s ultimate goal is still unclear. AT&T and Verizon Wireless want to extend their current networks, and Frontline Wireless wants to build a new nationwide wireless service.

Google, some analysts say, may be bidding mostly to gain leverage in any negotiations with with wireless carriers.

David T. Witkowski, vice president of the Wireless Communications Alliance, said if Google ended up winning the auction it might be able to extract concessions around network neutrality by carriers who wanted to use the spectrum.

“I think their strategy is to bid to influence and if they do win, I don’t think that they will be unhappy,” he said.

And in a research note earlier in the week, Benjamin Schachter, an analyst with UBS, assured investors he did not expect Google to bid to win. Schachter cited remarks Google co-founder Larry Page made during a conference call with Wall Street analysts last month.

“I think we have many, many different options available to us as a company in terms of spectrum and connectivity for people and wireless and so forth,” Page said. “So I don’t think we feel like there is any desperate need for us to have to bid to win or anything like that.”

Meanwhile, Google’s push for open access has already had results. Verizon Wireless recently said it would let its customers buy devices from other companies for use on its network as long as the gadgets met technical standards.

AT&T also said it would distribute phones with Google’s Android software if its customers wanted them. “We’ll take a look at it,” Stephenson said at a forum sponsored by the Churchill Club on Wednesday. “They’ve never made an operating system but they are smart guys. . . . It will be interesting to see if they know how to develop a carrier class operating system.”

Though AT&T had earlier threatened to sue the FCC over the open access requirements, Stephenson said open access “is exactly where this industry is headed.”

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