Google gets half of what it seeks for wireless auction

Now what will Google do?

googleThe Federal Communications Commission voted today to approve rules governing an auction of 700MHz wireless spectrum that could alter the U.S. wireless industry’s competitive landscape. The commission voted to give consumers more choice and freedom with their cell phones and wireless devices. The “open access” provision will allow customers to use whatever phone and software they want on one-third of the network to be auctioned.

Now that the rules are finalized, possible bidders in the auction include Verizon, AT&T, Vodafone, and maybe a new player, Google.

The FCC, however, stopped short of a more ambitious provision that would have required a licensee to sell access to its network on a wholesale basis, something Google has openly sought. Google last week pledged to spend up to $4.6 billion if the FCC agreed to auction rules favoring new entrants such as Google.

FCC Chairman Kevin Martin had said before today’s vote that he had come halfway, meeting two of four conditions (open access), but he had not agreed to the wholesale condition, which Google previously indicated would be a deal-breaker. The commission’s vote today is largely unchanged from Martin’s earlier statements.

It’s uncertain if Google will participate in the auction or forgo it based on today’s FCC vote.

The auction is expected to raise between $10 billion and $15 billion. It has come about because the spectrum used by television broadcasters for UHF will be abandoned when TV moves to digital frequencies in February 2009. The spectrum has been coveted by carriers such as AT&T and Verizon for nearly 10 years because wireless signals in this spectrum could travel farther distances and easily penetrate walls.

Earlier in the year, Google outlined a four-point plan advocating four “open access” principals it wanted attached to a section of 22 megahertz of the spectrum. The Internet search company argued that such conditions were necessary to give a new competitor, such as Google, Ebay, or Internet-based phone provider Skype, assistance in entering the broadband market, which has been dominated by large, powerful telephone and cable companies.

U.S. carriers currently exert strict control over which Web sites, search engines, music services, and the features and functions of cellphones are available to customers on their closed networks. This recently was illustrated when Apple’s highly-touted iPhone debuted at the end of June: Consumers could only use the phone on AT&T’s U.S. network.

Google’s wireless plans are largely unknown, but it has been speculated in traditional media and by bloggers that the Internet search company wants to extend its popular tools such as Gmail, Gtalk, YouTube, Google Calendar, Google News, Google Reader, and Google Office, among others, making sure these are available to customers regardless of the carrier or phone. It’s also looking like Google wants to extend its ecosystem beyond computers and the Internet into television and wireless, either as a service provider or possibly with the Google Phone.

Consumer groups quickly reacted to “a missed opportunity” to radically change the U.S. wireless industry and how Americans access the Internet in the future. The Consumers’ Union said in a statement, the FCC had “squandered an opportunity to ensure lower prices, better service, and greater innovation for users of wireless services.”

Cell phone users expressed disappointment with the FCC’s vote and the possibility that Google may not bid, saying that “greater innovations” would result if Google bids and that consumers can “expect more of the same” from U.S. carriers.

last100 is edited by Steve O'Hear. Aside from founding last100, Steve is co-founder and CEO of Beepl and a freelance journalist who has written for numerous publications, including TechCrunch, The Guardian, ZDNet, ReadWriteWeb and Macworld, and also wrote and directed the Silicon Valley documentary, In Search of the Valley. See his full profile and disclosure of his industry affiliations.

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