Will Google become a wireless carrier?

In the aftermath of the FCC's ruling on radio spectrum, Google might be considering becoming your cell carrier. Then again, maybe it's not.

Published August 1, 2007 4:46PM (EDT)

The FCC's decision to hand Google a partial victory -- or a partial loss, depending on your POV -- on "open access" wireless rules sets up an intriguing Silicon Valley guessing game. Google had promised to put at least $4.6 billion in a pitch for the 700 MHz band of wireless spectrum if the FCC adopted full open rules on the airwaves. But now that the FCC has decided otherwise, will Google still try to buy wireless space and thus become a carrier?

Google's not saying. Its official position -- as expressed to reporters and on its company blogs -- is that it has not decided yet. "For our part," wrote Google attorney Richard Whitt on the company's Public Policy Blog, "we will need time to carefully study the actual text of the FCC's rules, due out in a few weeks, before we can make any definitive decisions about our possible participation in the auction." The company has time to decide; the auction for the new radio space will only occur next year.

But we don't have to wait till next year to game it out -- we can look at the pros and cons now. There are, on the one hand, loads of reasons for Google to stay out of the auction. For one thing, telecom is not its game; sure, Google has made a bid to provide municipal Wi-Fi service to San Francisco, but its chief expertise is in providing functionality to the Internet, not in running the network. Google is what you go online for -- it's not how you go online.

Telecom firms also enjoy myriad advantages in the wireless carrier business, advantages that would make it tough for any company -- even Google -- to enter the game. AT&T, Verizon and others have already installed thousands of radio towers and other network infrastructure to maintain their current networks; if they end up with space on the 700 MHz band, they can use that equipment to provide signals on the new space. "Non-incumbent" firms like Google, though, will have to consider paying for all that in addition to the price of the radio space at auction. This means that existing firms can pay a lot more for the space than can new companies. (This was one of the reasons Google wanted the FCC to force wireless carriers to lease radio space to new companies; the FCC rejected that proposal.)

Finally there's Google CEO Eric Schmidt's promise to FCC chairman Kevin Martin. On July 20, Schmidt sent a letter to Martin in which he said that "should the Commission expressly adopt" Google's openness guidelines, "Google intends to commit a minimum of $4.6 billion to bidding in the upcoming auction." If Google bids now, even after the FCC decided to reject its guidelines, won't Schmidt just look like he'd been bluffing?

I keep thinking, though, how lovely it would be to have Google run my wireless network. Imagine the functionality! Imagine the competence! Sure, buying up radio space and installing towers would be a stratospheric expense for Google. But the gains for the rest of us could be marvelous.

The speculation is that if Google bought radio space, it would operate it according to the principles it outlined -- specifically, that it will lease the space to other firms seeking to provide coverage to users. This has the potential to create a new marketplace of wireless choice -- there'd be firms other than AT&T, Verizon, T-Mobile and Sprint to choose from.

There's another reason for Google to make a bid, too. Yesterday the FCC did adopt a couple of openness rules for the 700 MHz auction -- it said that carriers cannot dictate what devices or applications people use on the new networks. What's less widely known is that these rules are contingent upon a reserve price of $4.6 billion. If nobody bids at least this much for the radio space, the rules won't apply.

Thus if Google wants those very minimum rules to stand, it might well be considering putting out some of its cash to become a carrier.

By Farhad Manjoo

Farhad Manjoo is a Salon staff writer and the author of True Enough: Learning to Live in a Post-Fact Society.

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