FCC Airwaves Auction and Google

December 4, 2007

I love a good conspiracy theory.

Therefore, I want to know what Google is up to concerning their go-it-alone bid in the FCC auction for a piece of the wireless spectrum. Google may have to go as far as financing their bid because, despite their success, they don’t have the flow of hard cash needed to win. Moreover, a writer from the National Post mentioned that a Goldman Sachs analyst viewed “negatively a scenario in which Google wins the auction and decides to build and run a wireless network on its own.” I agree; I highly doubt they would want to take on the cost of maintaining the spectrum, and would most likely partner with someone to take over the nitty-gritty details. So what is there motive?

It seems many are parroting this section of the press release by Google:

Consumers deserve more competition and innovation than they have in today’s wireless world. No matter which bidder ultimately prevails, the real winners of this auction are American consumers who likely will see more choices than ever before in how they access the Internet.  

Eric Schmidt is correct in stating consumers want more innovation. Thing is, besides the AdWords gold mine, this company has yet to make a successful foray into, well, anything else. So far search advertising is their one trump card (although that is a damn valuable card to be holding). I think the second card they hold is their staff. Google allows their engineers time to work on their own side-projects (read: you have free time, but we own anything you think up…) and works hard to keep their people happy (have you been to the NYC headquarters? Their cafeteria has an incredible view of Manhattan, and some kick-ass sushi). Thus Google has a great stronghold on housing the potential for innovation.

What’s ironic about the press release is that Google is trying to position themselves as an advocate for openness. I about died laughing when I read that line.

But then again, Elizabeth Woyke noted that others agree: Amol Sarva argues that “simply publicizing its involvement [in the auction] should help achieve Google’s goal of liberalizing the wireless industry.” Google is the starting point of more than 70% of internet searches, and now they are bidding to control another key access point to the Internet. In addition, they are developing Android to further control that access point (assuming they win the bid). They are working hard to ensure the wireless industry is liberalized in their favor; any company would do the same, but for a company that has yet to produce any solid wireless gizmo (be it software, hardware, etc.), the question becomes, “Are they simply building structures to be ready for the future, or do they already have something up their sleeve?”

John Fine put it thus: “The eternal story line in media is ‘Google is moving into [fill in the blank].'” True. His byline reads that Google “sticks ads all over. But to maintain growth, it may need to own the places it puts them.” Are they really betting that expanding the reach of their advertising program onto the mobile phone is worth two years of their earnings? Does that much growth potential exist in that sector? I doubt it. For example, Woyke and another writer pointed ou that “Google lobbied hard to change rules governing use of the spectrum and was able to get lawmakers to ensure an open standard for part of the spectrum.”

They’re up to something. I can’t put my finger on it, but it’s there.

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