This isn't going to further endear Google with the current telecoms establishment...
NewYork Times
If Googlesucceeds with federal regulators, it could change the way millions of Americans use their cell phones and how they connect to the Internet on their wireless devices.
In the Internet giant's view of the future, consumers would buy a wireless phone at a store, but instead of being forced to use a specific carrier, they would be free to pick any carrier they wanted. Instead of the wireless carrier choosing what software goes on their phones, users would be free to put any software they want on it.
Google believes that the cost of voice calls and data connections to the Internet may be partly subsidized by advertisements brought to users by Google's powerful online advertising machine.
There might even be a Google phone.
That vision, according to several analysts, is the reason Google said yesterday that it would bid upward of $4.6 billion for a swath of the nation's airwaves, which are set to be auctioned by the federal government next year - as long as certain conditions are met.
But Google's efforts to position itself on the side of the consumer are also part of a fierce lobbying battle that pits it and other tech companies against wireless carriers, who oppose conditions that Google wants to set on the winners of the auction. VerizonWireless has called the conditions "corporate welfare for Google." And AT&Trejected Google's latest effort, calling it an "all or nothing ultimatum." The Federal Communications Commission chairman, Kevin Martin, has come out squarely against two of Google's four proposed conditions.
The F.C.C.'s rules governing the auction could shape the landscape for the next generation of mobile telephones and wireless Internet use.
"When you go to Best Buyto buy a TV, they don't ask whether you have cable or satellite," said Blair Levin, a former F.C.C. official who is now an analyst at Stifel Nicolaus & Company. "When you buy a computer, they don't ask what kind of Internet service you have, and the computer can run any application or service. That doesn't exist in the wireless world. That's where Google wants to go with this auction."
Google has already invested millions of dollars in mobile phone technology, in part, to develop a comprehensive set of software for mobile devices that goes well beyond the mobile search and map services it already offers. Rumors about a Google phone that would provide easy access to the company's mobile services have been persistent.
The company has been characteristically circumspect about its mobile plans, and just this week, Eric E. Schmidt, Google's chief executive, deflected questions from an analyst about plans for a mobile phone. "We have looked pretty carefully at wireless and are thinking about what we want to do there," Mr. Schmidt said.
But Mr. Schmidt stressed the importance to Google of a network where anyone could plug in any device and have access to the full abilities of the Internet. In such an environment, Mr. Schmidt noted, mobile phone users would become significant consumers of online advertising, Google's core business.
Google fears that some of its mobile efforts could be thwarted - or prove less lucrative - if a handful of cell phone carriers continue to dominate the wireless Internet world and retain the power to determine what services and applications run on their networks. Google's set of proposed rules would have the F.C.C. require that any devices and any application could be connected to the wireless network using the auctioned spectrum. Further, they would require that whoever wins the spectrum make a portion of it available to resellers on a wholesale basis, which Google and other technology companies believe is necessary to promote broadband competition.
"I want people to have the choice to use our service," said Chris Sacca, head of special initiatives at Google. "That is something that I fear won't exist in this space."
Even if Google's service was not blocked outright, an open network would be favorable to Google's business, as the company would not have to contract with carriers to insert ads into the service, said Paul Kedrosky, executive director of the William J. von Liebig Center for Entrepreneurism and Technology Advancement at the University of California, San Diego.
So what would Google do if its conditions were put in place and it won the auction?
Mr. Sacca said that Google was not likely to build a wireless network or get into the Internet service business itself. "We could offer it to anyone who wants to collaborate with us who embraces our principles of openness," Mr. Sacca said.
The licenses, considered the beach-front property on the electromagnetic spectrum, are in the 700 megahertz band of radio frequencies, which are being surrendered by television stations as they convert to digital broadcast. The auction, to be held early next year, is expected to raise more than $10 billion in revenue for the government.
The commission has been heavily lobbied in recent months about crafting auction rules. The commission is expected to issue the rules in the coming weeks. Any rules can be adopted only by a majority of the five commissioners.
Mr. Martin's draft proposal contains some elements of Google's plan but not others. It proposed, among other things, that about one-third of the spectrum being auctioned be available for an "open network" that could be used by any mobile device or service. It also proposed no limits on the software applications used over that network.
"We're trying to ensure that we develop a wireless broadband provider who has a more open platform," he said in an interview yesterday.
He said he wanted the terms of the auction set so the winners invest in upgrading wireless networks. But he also emphasized that his proposed rules would permit the winners to resell spectrum.
"If you want to be the winner of the auction, we are proposing open handsets and open applications," he said. "If you win, you can be a wholesale supplier. Nothing prevents that."
On Thursday, AT&T said it represented a fair compromise. But yesterday, after Google said the Mr. Martin's proposal didn't go far enough, AT&T reacted swiftly.
"This is an attempt to pressure the U.S. government to turn the auction process on its head by ensuring only a few, if any, bidders will compete with Google," said James W. Cicconi, a senior executive vice president at AT&T, in a statement. "If Google is serious about introducing a competing business model into the wireless industry, Chairman Martin's compromise proposal allows them to bid in the auction, win the spectrum, and then implement every one of the conditions they seek."
Verizon was similarly critical. "Google's filing urges the F.C.C. to adopt rules that force all bidders to implement Google's business plan - which would reduce the incentives for other players to bid," said Thomas J. Tauke, Verizon's executive vice president of public affairs, policy and communications, in a statement.
At a Congressional hearing next Tuesday, Mr. Martin is expected to testify about the auction and the proposed rules.
Some commission officials and telephone industry executives have expressed concern that Google was seeking the imposition of a wholesale requirement so that it could purposefully lose the auction, but still have access to a network at lower cost.
Mr. Levin, the former F.C.C. official, suggested that Google's latest move might simply be an effort to put pressure on the commission. "There is a significant difference between saying you are going to bid and actually bidding," Mr. Levin said.
"Lots of people in the context of an auction policy make promises," he said. "Whether they follow through is a different matter."
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