Google is playing to win in the 700 MHz auctions

Many say Google will bid to lose in the upcoming 700 MHz auctions and many more are equivocating.  The idea is Google's entry alone will induce enough openness, and besides they couldn't afford to become an operator.  This shows a total lack of understanding!

Google is run by idealists who want to change the world and have the money to undertake grand projects.

They are already seeking to index, and make available, all the world's information. As part of this vision they are scanning all existing books and fighting the legal battles this implies.  When their own video repository failed to gain traction, they bought YouTube for $1.65B, and took on their legal hassles. Most recently their Palimpsest project is going to host enormous scientific databases for free.  In short Google is not afraid to spend money or take large risks, including legal risks, to accomplish something they believe in.

Critical for Google's vision, and for their business, is open Internet access.  Fixed access is relatively open today, but mobile is a big problem.  So Google won't seek a little opening on the part of some US operators.  Google needs open mobile access, i.e. dumb pipes, which means the total destruction of existing mobile operator business models.

They've already started from the edge with the Open Handset Alliance and the Android open-source mobile handset stack. Google's made a major investment here, not to compete for revenue on handset software or to control applications on edge devices, but to tip the balance from operators to the edge.  First and foremost, Android is an open platform to encourage innovation.  It's also free.  Google doesn't need or expect a direct return on this investment.

The 700 MHz auctions are just the next step.  Again, look for something unconventional.  Google doesn't need or want to become a mobile operator.  They want to create an industry where mobile dumb pipes are widely available.

 

Assuming Google wins, what might they do?

This is speculation on my part, but a good plan might be two fold. 

First pick the latest mass market technology for mobile broadband access, probably mobile WiMAX, and set up a program to foster numerous independent wireless ISPs (WISPs) rolling out services on Google's frequencies.  In the 1990s, the US had thousands of ISPs providing dial up access over traditional phone lines.  The goal here would be to duplicate that entrepreneurial flurry for both fixed and mobile wireless access.

You may argue fixed is OK as services are local, but for mobile you really need regional and national coverage.  Yes, but Google themselves could offer WISPs the opportunity to participate in a federation for national roaming, perhaps using Google Checkout for payments.

Second, formalize a set of rules for smart-radios based on the work they've been doing for open access to TV White Space.  Throw open their spectrum to anyone who's willing to use appropriate smart radio technology, thus fostering long term innovation.  Open access in the 2.4 GHz and 5 GHz bands has certainly fostered innovation.  Google could achieve something similar.

These two steps, a mass market technology like WiMAX for rapid deployment, and open access for innovation, yield the maximum long term benefit for this spectrum and increase the likelihood that other countries will follow the US lead (as the world has done for 2.4 GHz and WiFi).

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Comments

[Craig Plunkett]

If your idea falls into place, one of the key components will be long term leases at low prices for these frequencies, perhaps tied to buildout performance. If Google wins, they have to make sure the spectrum has a physical buildout in a reasonable timeframe. From my experience at running a WISP, the commercial parameters of buildout are primary, and those dictate the technology to be deployed. The revenue ceilings for WISPs are capped right now by the current competing utliity offerings (sat/cable/dsl), and this dictates the use of unlicensed 5 and 2.4 GHz equipment, which in turn dictates the kind of footprint you need to build out. The next biggest hurdle is finding affordable mounting assets, and reducing the cost of customer premise equipment installs. 700 MHz will cut that dramatically, because you will no longer have to mount a receiver external to the premise, and your distribution network no longer needs to be as dense.

[Ike Elliott]

Good post, Brough. I also think that Google is bidding to win, because it serves Google's strategic goal of tearing down the walls of the wireless carriers' gardens. Google is much better positioned to effect change, sooner, if they own spectrum. More on my blog at http://ikeelliott.typepad.com/telecosm/2008/01/google-will-win.html

[brough]

Thanks Ike. I normally follow your blog so I don't know how I missed that. Also your reference to Harold Feld is great. http://www.wetmachine.com/totsf/item/951 From here on out, I'll try to track Harold as well.

[brough]

Craig, I agree except Google may not need to require long term leases with build out requirements. There are alternatives. What about a lite leasing arrangement somewhat similar to the FCC's lite licensing for the 3650-3700 MHz band? See: http://en.wikipedia.org/wiki/IEEE_802.11y

I haven't thought through exactly what I'd do, but more players is better than just a few and I'll be there are other innovative schemes to get the spectrum into use that Google folks are discussing internally.

[Craig Plunkett]

Google doesn't need the long term, the WISP needs the long term, or at least some predictable cost framework over time to see if it's worth it to even be in the business. It is barely worth it to be in the WISP business where I am because of competitive pressures from Cablevision and Verizon. You have to mine some very narrow niches that keep getting smaller as the incumbents finish their buildouts.
Basically its building another utility, and a ground war fought with mounting assets and signing up customers for multi-year cash flows. I think there will be innovative solutions that combine fiber and wireless to build connected islands based on the Frankston model. School districts here have been building their own dark fiber nets between their buildings, and that may be a good starting point.