Google bidding for spectrum – not entirely a blessing

Google is really trying hard to get its applications and services into mobile phones. But in the bargain it could be encroaching into every part of our Internet lives from its core business in search, to the Android operating system and applications on phones, to now owning spectrum for mobile telephony and data.

Google announced today that it will apply to participate in the Federal Communications Commission (FCC) upcoming auction of wireless spectrum in the 700 megahertz (MHz) band.

As part of the nationally mandated transition to digital television, the 700 MHz spectrum auction -- which begins January 24, 2008 -- will free up spectrum airwaves for more efficient wireless Internet service for consumers. Advocacy by public interest groups and Google earlier this year helped ensure that regardless of which bidders win a key portion of the spectrum up for auction (the so-called "C Block"), they will be required to allow their users to download any software application they want on their mobile device, and to use any mobile devices they would like on that wireless network, Google said. The winner must ensure these rights for consumers if the reserve price of $4.6 billion for the C Block is met at auction, it added.

Google’s moves in the last few months have been aimed to get its services into mobile phones, thus opening up a new advertising revenue stream for the company. Mobile operators however want to control what applications users download, because they are also beginning to see special services as large potential revenue streams, including from advertising. If Google wants to get into the phones of these mobile operators, it can only do so through generous revenue sharing deals with the operators.

The search giant has hence been pushing for opening up the networks, to further its business interests. The 700 MHz spectrum auction was an opportunity for Google and other groups to advocate to the FCC that at least this part of the spectrum should be kept open by bid winners.

Google has been at the same time pushing the open source Android platform for mobile devices, which will again support third-party applications, including Google’s. However the big players like Nokia are not backing this initiative. Having seen the control and commoditization of the PC platform by Intel and Microsoft, they don’t want something similar in the mobile phone market.

It is not clear at this point whether Google really plans to win the auction, or just meet the reserve price for the auction. Also not clear is whether Google, if it bids seriously and wins, will get into actual network operation. If it decides to do so, not only other service providers and mobile phone makers, but also users should be worried. Google will be playing in too many inter-related markets from mobile networks to mobile devices to applications such as search, giving it a lot of opportunity to control.

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A Google phone. So why the fuss ?

Tracking tech companies these days is like tracking movie stars and other celebrity. Will she marry that handsome dude she has been seeing of late ? Does that mean she has fallen out with that gorgeous hunk she was seen with last week at the Ritz ? And by the way, any truth to reports that she had had a silicone implant ?

There is abundant speculation in the mainline newspapers, trade publications and blogs that Google may be bringing out a mobile phone. Surely Google Inc. is loving it, as did Apple Inc. when all that speculative frenzy built up around the iPhone. Folks save them a lot of advertising bucks by doing their work for them. We had pre-announced the iPhone based on crumbs Apple fed us, and we are now trying to pre-announce the Google phone – whether it is a real phone or only software.

If Google brings to market a phone, that is nice. It is also nice every time Nokia Corp. or Motorola Inc. bring out a phone with some new feature. But it is nothing to get into a paroxysm about.

Yes, the PC changed the world in many ways, but another mobile phone will not.

In fact the mobile service providers will ensure that the phone does not go very far. Mobile service providers want control, and they will want control over everything that goes into that phone. Apple wrested control from AT&T by offering it exclusivity, but, despite the popularity of the product, remember it runs on only one network in the US.

The only way Google can play this game to its advantage is to buy wireless spectrum, and allocate it to buddies who will invest in mobile communications companies. There are reports they are going to do just that. But getting into the service provider business to make sure its content and applications is on the phone, is akin to starting up a PC company that ships only Google apps. Google does not seem to know what to do with its cash just now.

I am more inclined to take the view that Google like Microsoft Corp. may emerge as a provider of software and reference design to mobile phone makers like Nokia and Motorola. Miguel Helft at the New York Times is one of a number who are coming around to this view.

Microsoft hasn’t been very successful in this market because cell phone makers have always been wary of large companies invading their turf. That is the reason Nokia has invested in Symbian, a developer of software for phones. Google too will be seen as an upstart by entrenched phone makers.

Besides, if folks like Nokia use the Google software, they will still be required to tweak it for the operator, who may decide he wants Yahoo’s application, rather than Google’s.

But all this hasn’t answered my question. Why is everyone going ga-ga over Google’s new phone/phone software ? Are we so starved for excitement ?