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The Pulpit
Pulpit Comments
July 27, 2007 -- Is Google on Crack?
Status: [CLOSED]

I think this is Google's response to the not so thinly veiled threats from the Telco's to charge "access fees" for letting us have the privilege of using the bandwidth we already pay for to use Google. If Google can get that spectrum or insure that it's fairly used, they've protected themselves and their business model to a degree on the future wireless internet.




The Telco's have already made it clear they want a piece of Google's business. They're going to go after it no matter what. I think it's to Google's advantage to raise the ante a bit by threatening to displace them entirely.

Andrew Mayne | Jul 27, 2007 | 2:41AM

I enjoy reading Robert's column, but am neither a business nor a technology expert. My feelings about Google are therefore something of a gut reaction, but sometimes gut reactions turn out ot be as valid as informed opinion.

I don't trust Google. This is the company - and apologies if they have since backtracked on these issues - that colluded with the Chinese government in restricting web access and seemed willing to share personal (i.e. search) information with the US authorities - in both cases, one suspects, because it would benefit Google. Supporting this company against the telecoms giants could be like viewing Microsoft not ceding full control of DOS to IBM as a victory for the little guy, which it was - THEN. Reading Bob's column I began to think that there was something else behind it - that Google seeks to dominate anoother area - namely the next generation of mobile telephony, or the genuine mobile Internet. They will be aware of the fragility of their market dominance, and despite the wisdom of Bob's comment about the telecoms companies, may feel that a shift in the perceived order is imminent, as happened thirty year's ago in the computer industry.

Perhaps I'm wrong about Google; maybe they are good guys who like most people want to make money and ensure that those good times continue. And if they are planning, and do implement, next generation mobile web services, I'm sure that millions of users will benefit. Just be wary of seeing Google as a knight in shining armour.

Terenc Teevan | Jul 27, 2007 | 3:12AM

For once in my life, I will disagree with something in this column: Google's success is *not* dependent on us not changing our favorite search engine: they don't make a dollar out of their web page: they are advertisers, not a search engine, when it comes to the bottom line.

The rest of the column, as usually, I fully agree with.

César | Jul 27, 2007 | 3:20AM

Organic search is the loss leader that Google operates in order to generate the user volume to be the largest paid search player.



So, César is seriously confused. The reason for the revenue is the popularity of search results. If no one used the search engine, then the revenue goes away. Third party revenues will disappear, too, because the primary volume of users comes from Google, and that's what attracts advertisers. If the users stop coming, the advertisers stop spending and the third parties currently offering paid search results from Google will find the vendor with the spenders. Death of the Google business model will follow, at least in the US; Americans don't really care whether a business works outside the US, if it fails in the US. In turn, global search deals with large American businesses will be affected, changing the landscape for search in other countries.



The question is, then, whether Bob is right about the retaliatory action? I fear that he might be. In which case MS Search and Yahoo are in with a chance, as would be a newcomer unassociated with their baggage.



Cheers, JeremyC.

Jeremy Chatfield | Jul 27, 2007 | 3:44AM

But what is Google's primary advertising space if not the text ads they sell on their search results?

Google has clearly decided to play a subtle game with the public and their users. Their "Do No Evil" philosophy is tied up in free services and websites that people use everyday. This goes even into things like trying to make sure that the new spectrum is open to public access so that their applications can be freely accessible. See how Google Maps is making it's way onto every smartphone?

In exchange, Google sells your eyeballs to the highest bidder. I guess we're so used to being sold to that we don't mind as long as we think we're getting something in return.

Joaquin | Jul 27, 2007 | 3:52AM

I can't see the telcos messing with default search engines just because Google dares to bid on spectrum. If the telcos think they can make some money by changing the default search engine on their supplied browsers, they'll do it whether Google bids on this spectrum or not. Vengence is NOT a business case.

I do agree with you 110%, though, on Google being completely, utterly, hopelessly out of their league when it comes to lobbying. The telcos have played this game for a century, and are old hands in Washington. Google's new to both Wasington lobbying and heavy-duty wrestling with the FCC. Not to mention a little too much devotion to idealism and not enough to realpolitik.

Samuel Greinke | Jul 27, 2007 | 4:37AM

Dark fibre network (will this have QoS?) + new data centres + femto cells (search Ubiquisys) + Grand Central + Google talk + License (which will run VoIP)

GSM link will not have enough bandwidth for VoIP unless EDGE is running on-top though.

EDGE? iPhone?

Is this a complete new network to rival the old operators? With a complete IP core network???

Jon Kearney | Jul 27, 2007 | 4:53AM

I disagree with Google being out of their depth in Lobbying. Lobbying power is a function of money invested. Politicians are only too willing for New companies to pay into their pockets, as is Google.

And a new lobbyist with new money may make more hay than old money...

author of Explore the Taj Mahal | Jul 27, 2007 | 5:00AM

Is there a way we can donate to a "Google wireless defense fund"? We're just going to give that money to the telecoms anyway!

hseldon | Jul 27, 2007 | 5:21AM

Speaking of ganging up by incumbents...since last month my GTalk returns a message that there is a connection error and the service is blocked. Today I noticed that Google chat module available in Gmail is also returning more or less similar message. Bottom line: two services have been cut off to customers by Comcast in South Jersey area. In this context I only wish god speed to Google. When Google turns as an incumbent, after as long as it took for telcos, my grandson or grand daughter would gang up against Google.

Tomtom | Jul 27, 2007 | 5:35AM

I think there is a third possibility - related to but not equal to your "poker" theory: Try to set these conditions in order to lower the (perceived) value of the spectrum for the other bidders, thereby decreasing the final price you'ld have to pay in order to get it ..

Valentin | Jul 27, 2007 | 5:51AM

Anyone who has used GoogleAds knows that Google's income is not wholy dependent on their dominance as a search engine. In our experience 80-90% of the references that came in from GoogleAds did not come from actual searches, but from context-sensitive advertisements placed on the sidebar (or other area) of content-based web pages. It does not seem to me that this income has to do with Google's popularity as a search engine. It seems to me that the underlying intelligence/programming/infrastructure to create this kind of application is not trivial.

How much of their income comes from this as opposed to pure search -- I don't know, but I agree with César

Rebecca | Jul 27, 2007 | 6:17AM

Google and Apple are closely "linked" these days, with the Google CEO sitting on the Apple Board. I believe the two companies combined have an ambitious long-term plan to rule the coming new uber internet-driven world. When I see moves such as this, I am always curious about what Apple might have to gain from such a move. I wonder how these proposed changes in wireless broadband might affect adoption/sales of the iPhone, for example, as well as whatever other wireless devices are rising on Apple's horizon.

gw | Jul 27, 2007 | 6:30AM

Ars Technica has run about four good articles so far on this process, including (what appears to be) information on the FCC members' positions. http://arstechnica.com/news.ars/post/20070710-fcc-chairmans-draft-rules-for-700mhz-auction-call-for-open-access.html

Dave Brown | Jul 27, 2007 | 7:11AM

This is the way I see it:

First, if it made business sense for the telcos to *attack* Google by restricting Google's access to their networks, they would have done it already. Obviously, it doesn't make business sense and/or the risk is too great.

The only way such a "retaliation" might work is if a third-party (with deep pockets) such as Microsoft is willing to assume the risk in such a manner as to innoculate the telcos.

Now, Bob, you know more about these things than I, so if you can articulate such a scenario please do.

Second, regarding Lobbying efforts, yes the telcos have uber experience and knowledge and are to be feared. Though the thing about America is that EVERYTHING is for sale, all you need do is be capable of paying the price.

Google has the pockets to BUY all the knowledge and experience they need to compete with the telcos in Washington. Google's main obstacle in this arena is overcoming the inertia and entrenched interests that decades of lobbying by the telcos has resulted. This only means Google must dig a little deeper into their pockets, in America EVERYTHING is for sale.

The one true advantage that the telcos have over Google in Washington is that the power brokers *know* the telcos will be here tomorrow. As Bill Gate's paranoia suggests the likes of Google could be gone tomorrow.

Lastly, I believe everything I've stated is real, as in reality. Google has little to fear 'competitively' with regard to their search/advertisement business from the telcos. Google with their deep pockets has bought and paid for equal access in Washington matching the telcos.

Yet, equal doesn't equal victory. Google must defeat the politically entrenched inertia the telcos have earned over the years. I believe Google is combating this entrenched inertia by 'amping' things up!

If you're sitting across the poker table from an equally capable player who you suspect is holding good cards, there are only two options, fold and leave your money on the table, or raise and pay to see his cards.

Google has just raised the bet. By doing so it puts them in control.

Additionally, and importantly, as Bob suggests, if Google is willing and communicates such willingness to drop the $20 billion, as well. Being willing puts Google in complete control.

This is the thing. In order for the Telcos to regain control they will need to pay (raise their bet) to an extraordinary, perhaps prohibitive level. In order to be certain, the price will need to be, figuratively, far beyond the $20 billion. Doubling or tripling Google's raise.

The question is whether such a price is worth the cost for a 'seeming' monopoly in a highly competitive and ever changing business?

Their alternative, a much cheaper alternative, is simply to forgo the 'seeming' monopoly and choose to 'compete'. That is to accept Google's terms.

The end game, Telcos agree to the terms; Google agrees to drop out of the bidding; Telcos save 10 or 20 billion upfront dollars; and Google gets what it wants---openness.

Why do I hear Kenny Rogers singing the Gambler in my ear?

:)

ToranagaSama | Jul 27, 2007 | 7:39AM

When your company name becomes a verb, that is a HUGE mind-share to overcome by your competitors. MS tries to steer your search engine to theirs, and they control the OS, I hardly think AT&T will be capable of thwarting Google. Google also has a lot more goodwill from society than AT&T does.

I don't know if Google can pull off the purchase, I pray to god they can, but I don't think they need to be worried about retaliation.

It would be funny if all searches for AT&T (and others) somehow started being directed to websites containing negative info about them... ;)

M | Jul 27, 2007 | 7:43AM

I think we need to start a fund for people that support Google to donate money to. That would help me feel less useless in what choices our government makes for us.

Marty Criswell | Jul 27, 2007 | 8:35AM

OK, here's the deal. Google has pushed into mobile phone space in a big, huge way. However, if you have a standard Verizon Wireless phone, you are out of luck. The only way you can run anything on a Verizon standard phone is if the software is running on BREW. The only way to get something to run on BREW is to pay Qualcomm and Verizon. That's it. No Java in the browser, nothing. That is what it is all about.

/eric | Jul 27, 2007 | 8:51AM

So, next week does Bob tell us about the credible email from inside Google he recently received?

Erik | Jul 27, 2007 | 8:52AM

Isn't it funny? The FCC is supposed to be the advocate for the people, not the telcos. But for all of their history, they've been corporate laptogs. What a stupid pretense of democracy! How can we get those slimebags out?

Rick | Jul 27, 2007 | 8:53AM

Google has about 12.5 billion in cash
and Apple has about 12.5 billion in cash.

They could easily join forces and make a monster buy.

Jacob Varghese | Jul 27, 2007 | 9:03AM

1. Google sells advertisements. Using innovative approach they are creating new space to sell more advertisements. Think of it as planting more billboards in places no one else imagined before.
THEY ARE NOT IN ANY OTHER BUSINESS.
Google is like a babe in the telco woods on this matter.
2. The incumbent telcos do not want this 700mhz. It's a huge technological headache. Try to remember when and why the first world phone came about. Now think that the same phone will need to cram support for a new frequency ( antenna, signal processing, etc. ).
3. The consumers will be locked into a technology
( CDMA vs GSM ) without tangible advantage.
4. The fun part - wild speculation:
Google would like to stir the discussion into creating a green field for selling more advertisement.

What? create a managed wireless internet.
By Whom? Incumbent telcos.
How?
- Create a controversy with all the right
buzzwords and ideas that will appeal to
politicians.
- Convince the telcos that it's for their
own best interests (.. Or Else..)

Moish | Jul 27, 2007 | 9:04AM

Finally some one stands up to the telcos and then they get called stupid. Thats ridiculous, yes they are sticking their neck out and being rash, but I am glad someone is doing it. I think they are being risky, but you should be calling them heroic more then stupid. They are one of the few companies willing to even try to stand up and take a risk for openness in this area.

Andy Evans | Jul 27, 2007 | 9:10AM

700MHz is a long wavelength for mobile use it does radiate well. So what if Google did win - and built a box for every home that offered wireless internet access and phone service - and each box talked to all the boxes close to it to create a distributed network that would be reliable and offer high bandwidth?

Google might own all the local ISP access within a few years and then, once they have good coverage within urban areas they introduce a phone that connects to their network...

Edmund | Jul 27, 2007 | 9:28AM

"... the telcos, who are also arrogant and have a kind of reptilian craftiness ..."

Like 'em that much, do you?

PeteF | Jul 27, 2007 | 9:36AM

This is the first time that I've left a comment here - and I'm a long-time reader. I'm commenting this time because I've never agreed with you more than I have on this topic. With one or two minor exceptions

1) "Frankly, I see Google heading for a big loss on this one". Maybe - but they're also one of a handful of companies that could actually pull it off.
2) "What if Verizon, and AT&T, and Comcast, and half a dozen other huge broadband ISPs suddenly cut deals with some search company other than Google and your ISP-supplied browser and homepage no longer give such prominence to Google?" Unless that company (Yahoo, whomever) pays as much as Google, they won't. Can any of the others pay as much? I honestly don't know, but I'd guess not. Also, that's not the threat it once was. Even the borderline computer illiterate (my mum) have figured out how to get to google.com, regardless as to what their ISP has 'set' their homepage to.

Ross | Jul 27, 2007 | 9:36AM

Will Apple have a role in this new market?

Benton | Jul 27, 2007 | 9:55AM

Could this actually be a corporation trying to do something for the public good as well as its own? Could this be part of "do no evil?"

I agree with you about the lobbying capabilities of the telcos, BUT Google could mobilize its constituency and cause a political groundswell if it understood grass roots activity and the smart mob. More frightening to elected officials than lobbyists are mobs of potential voters expressing a real opinion.

francine hardaway | Jul 27, 2007 | 9:59AM

Francine, I wish there were hordes of voters with opinions, but as far as I can tell the American electorate passed away about 3 years ago. Voters are comatose.

Robert, I hope you overestimate the intellect of large corporations, though I reluctantly agree that they have a lot of smart lawyers where it matters most - in Washington.

I wonder if it makes a difference who wins the presidency in 2008? We tend to discount the effect of party, and I know Gore isn't going to run, but someone like Al Gore would make very different choices that George Bush.

John Faughnan | Jul 27, 2007 | 10:23AM

Two words: "dark fiber."

whitefang | Jul 27, 2007 | 10:29AM

Looks like Google's move to BPL may have to expand, perhaps the only option left against the incumbents.

Dwayne | Jul 27, 2007 | 10:35AM

Keep in mind that this spectrum will be broken into 3 parts:
22Mhz of "Open Access" and 10 Mhz of Public Safety in the Lower Bands as well as the remaining 28+/- spectrum in the Premium Upper Bands
Google may suprise everyone and actually go after the Upper Band that the Carriers really want and need to survive long term in the Broadband Data Space. If they can win this they can then open this up and use as they see fit. Talk about a disruptive force.
This would also allow the Local Service Providers to bid and win some of the spectrum (22Mhz)in their local markets.
All the FCC wants is $10-15 Billion and I really do not think they care who gets the spectrum. I am sure Congress has already spent most of this money.
Google means Search to most users and the carriers trying to impact this sector will be wasting their time and money.

Jacomo

Jacomo | Jul 27, 2007 | 10:36AM

Keep in mind that this spectrum will be broken into 3 parts:
22Mhz of "Open Access" and 10 Mhz of Public Safety in the Lower Bands as well as the remaining 28+/- spectrum in the Premium Upper Bands
Google may suprise everyone and actually go after the Upper Band that the Carriers really want and need to survive long term in the Broadband Data Space. If they can win this they can then open this up and use as they see fit. Talk about a disruptive force.
This would also allow the Local Service Providers to bid and win some of the spectrum (22Mhz)in their local markets.
All the FCC wants is $10-15 Billion and I really do not think they care who gets the spectrum. I am sure Congress has already spent most of this money.
Google means Search to most users and the carriers trying to impact this sector will be wasting their time and money.

Jacomo

Jacomo | Jul 27, 2007 | 10:36AM

I throw-up in my mouth a little every time I hear somebody spout off Google's so oft overused "don't be evil" motto.

Every company has a nice feel-good motto. Google is no different than any other company. The current golden boy who gets all the Apple-like feel-good vibe from the media no matter what they do? Sure. But this isn't about any acts of altruism on their part. This is about protecting and expanding their business - which is selling advertising.

Ron-Mexico | Jul 27, 2007 | 10:46AM

Among others, VoIP is not embraced because wiretapping it is very hard, GSM, W-CDMA and EV-DO have not been designed for it (but rather for high data rates) and it would be more difficult to justify high call rates (especially in Europe)...

Shuar | Jul 27, 2007 | 11:19AM

Don't forget the one thing that might award Google the whole shebang... their close ties with government spooks. The CIA and NSA have folks working inside Google, which makes perfect sense from a Homeland Security standpoint.

It's not a done deal, but you can count on these agencies to apply *lots* of internal pressure.

Ralf | Jul 27, 2007 | 11:29AM

I'm a little confused about this comment:
"Certainly Microsoft ... will be approaching all the outfits Google may have offended, trying to do exclusive search and ad deals with them."


It seems to me that most of the people who don't care about their default search are already using Microsoft as their search.

Kesler | Jul 27, 2007 | 11:32AM

My wife paid $832 for cell phone calls (US number) from Europe to her office in May. At $1/min. This is dumb. Need to work on a handier way to use Skype or Asterisk.

Hopefully the new 700mhz swath will be a help here too.

Bob Gustafson | Jul 27, 2007 | 11:40AM

Robert

Interesting article on a bold move from Google.

A couple of your statements didn't make sense to me.

You say that Google's betting the farm on this wireless spectrum. They aren't betting the farm - they've got so much cash they don't know what to do with it. 4.6 billion is betting the shed to Google.

You say that Google is dependent on people using its search. That's not true. Google's success is dependent on the inertia of millions of people that are making money using its AdSense product.

You also suggest that Google wants to compete with the phone companies. You're missing out on the real value that this spectrum represents to Google. If Google captures this spectrum, it could track users' activity and location, giving Google the ability to deliver localized, personalized, dynamic advertising to mobile devices and future Internet media devices. This would be tremendously valuable to Google.

Forget about Google wanting to be a phone company - they want to own the pipes that run the Internet, open it up, and extend their advertising empire to IP-based television, radio, billboards, mobile devices and anything else they can.

James Lewin | Jul 27, 2007 | 11:41AM

While Google's "Do No Evil" motto is obviously just a motto, there is no denying that Google does indeed to the LEAST evil, compared to any other company out there. So I really hate it when people point out one incident (the Chinese stuff) and say that Google is not good. They are not perfect, but are better than any of the other scum there.

addicted | Jul 27, 2007 | 11:51AM

1. They are geeks who want a connection to the network everywhere. Even at grandmas house in any place the incumbents dont bother investing in. They want to connect to everybody else, phone email video casting, or whatever.

2. They also REALLY dislike the way every other " provider " inhibits new technology and use that the customers actually want, because that is how they control the network and keep thier profits up.

E Tompkins | Jul 27, 2007 | 11:59AM

The bid by Google could be one or two things;
1. Boost the auction price and force the telcos to pay more.

2. A real bid and they have something planned for the 700-MHz band. I think Cringe has way too much faith in the telcos. They've only survived because they were monopolies and they've flopped with new technologies. Hell, they can't even do cable tv so how are they going to do something new? Look at VOIP. Verizon has tried stopping Vonage by suing them and then the telcos tried the 911 PR campaign (at the same time neglecting to resolve their 911 cellular issues). I say hooray for Google.

Al Langevin | Jul 27, 2007 | 12:05PM

So this may be a hopelessly naive comment (and I'm sure I'll be harangued about bring up the iphone), but here goes:

I can't help but notice that one of the 4 proposed obligations is open devices. The timing of this is interesting. Google has been very involved with the iphone, and it would probably be in their best interest to kill the deal with ATT being the exclusive distributor, to increase the rate of distribution, by opening it up to more carriers. And, I'd be suprised if Jobs wouldn't secretly support this.

Granted, this is a new spectrum that probably wouldn't technically effect the iphone during the duration of the exclusivity agreement, but it definately sets precendent and puts pressure on ATT.

IMHO | Jul 27, 2007 | 12:10PM

You fail to mention the main reason that, without Google's rules, it doesn't want to bid.

The telcos are willing to lose money on the spectrum and on the auction, just to keep other people out of the wireless market and to protect their existing businesses. However much Google would bid, it wants to make its money back on the licenses.

Therefore, the rules it proposes try to make it so that the spectrum is worth only what it's worth--the rules make it impossible for any winner, whoever it is, to keep others out of the market. Google thinks it could win an auction where the spectrum is only valued for its potential as a money-making property, not as a means to block out competitors.

Imagine if a car maker could just up and buy ALL of the steel in the world. Or if Starbucks could buy all of the world's coffee beans. With the weird situation with spectrum licenses, that's pretty much what you have the telcos doing: Buying ALL the spectrum. It's a rigged game and Google and a lot of other companies and public interest groups are fighting what may be a losing game to un-rig it.

john | Jul 27, 2007 | 12:14PM

I think that Cringely brings up a great point about Google, "whose success is dependent on us not changing our favorite search engine" ... Google's success is also based on consumers not installing Firefox with the Adblock Plus extension. Since the vast majority of their revenues comes from ads, what would they do if all searches that came up didn't display ads. Perhaps Google seeks a way to create a new revenue stream that can't be blocked with a free install and a few click!

Brad | Jul 27, 2007 | 12:41PM

AS far as I can tell, and as other has pointed out, Google's rules make it impossible for any winner, whoever it is, to keep others out of the market. Google is trying to open up the pipe. Unlike land line, wireless spectrum has no inherent structural barrier overhead for any potential user to get in. From the consumer's perspective, there is no reason at all for restricting its use to a particular company that I can see (other than the obvious safety, collision avoidance et al type of concerns). (From the company bidder's perspective, obviously they wish to make the most money, but that's not the consumer's concern). Openess means maximum innovation and lowest cost. For that reason alone, I think everybody who cares should support Google's position. I wish Microsoft, Yahoo, and other content and service providers would be far sighted enough to join force with Google as well. I doubt that Google would be hurt by the TelCo for taking this position. They may not win, but they change the debate. So regardless, it's win-win for them.

Dyung | Jul 27, 2007 | 1:30PM

Premise:
Google employs PhD level experts in Game Theory and Economics.
Conclusions:
They have a very good plan for this.
I don't know what it is.

James Andrix | Jul 27, 2007 | 1:31PM

The Brand Cringely, its the brand.

Google is already in the telcos revenge list.

What this brings is a lot of +ve branding. Thats what matters in the search business.

Vishi | Jul 27, 2007 | 1:46PM

Just FYI to those who think Google makes most of its money through AdSense (and not the ads on search).

AdSense accounted for roughly 1/3 of their total revenues in 2Q07. It's a growing segment for sure, but it's FAR from being their bell cow like search ads are. It's also their market segment most vulnerable to competition as the 'just slap Google AdSense on it' model for publishers is starting to get some push back with similar networks now offering better payouts and more transparency.

Ron-Mexico | Jul 27, 2007 | 2:26PM

As much as some people view Google as "evil", I just do not see it. I see the telco as greedy lazy parasites that are holding the U.S. economy hostage by not being innovative and not letting others innovate by providing an open network. There is much at stake for the country as a whole not just Google. The U.S. is a services economy and I believe an open nationwide wireless data network will drive productivity by generating innovative new products and services not possible with all the closed wireless networks.

Terry | Jul 27, 2007 | 2:31PM

I for one beleive that google realizes that this could backfire hugely on them, the proposal for new rules is probably to prevent that in the future. If google just bought up the spectrum and applied their rules to it, the telcos would cry their way to congress and they will do their best to get a comprehensive telecom bill to "ensure competition between providers" that continues to prop their mono-oligopoly structures. By proposing the rules before hand even if they are not accepted the telcos will have a nearly impossible case to promote, even the senators will have to say to them too bad you should have bid more for the spectrum. No matter what happens google will probably be in the winning seat, if they get the rules changed, there is little need to buy all or even any of the space. If they don't get the rules changed google can probably safely outbid all the telcos. No matter what happens google should win, and when they do each and every consumer will win by having the option of never having to pay for something so essential as the internet. The moment that happens the telcos just turn into the lame ducks they are.

sunn o)) | Jul 27, 2007 | 3:14PM

Google doesn't want to be a phone company. Far from it. Their world does not revolve around VOIP or phone service of any kind.



Rather, their world is search and the Internet. What better could they do than to expand to be a Wireles-ISP? They have been playing with it in San Francisco; and the spectrum that is up would be good one to use for it.


Additionally, it would probably make the spectrum work more than $20 billion to them. So, expect them to go for it, and to turn it into a Wireless ISP playground.



Profits in the playground wouldn't be hard to see either. They could license out regions to local providers, and use their search as the basis for entry. Want to join? No cost membership - just get the equipment, plug in, and see some ads on your page compliments of Google; with a portion going to the local service providers.


Definately any ISP's nightmare.

TemporalBeing | Jul 27, 2007 | 3:17PM

Google will win regardless of the outcome. They will win as long as no one figures out how to provide more relevant information with less annoying extras. It doesn't matter what the delivery method is. They have just sent a signal to the telcos. Any company that is willing to partner with them can share in the revenues that will beat the crap out of the consumer subscription fee.

Brian | Jul 27, 2007 | 3:23PM

I love Cringely, but he evidently didn't bother doing even the most basic research into the companies that he's talking about. AT&T and Verizon may be worth a lot of money in market capitalization (at&t = $230B, VZ = $123B, & Goog = $150B), but most of THEIR cash is tied up in infrastructure. Google doesn't have that worry.

Verizon made $90B last year, earning 12.15% return on equity. They have 3.45B cash on hand and $35B in debt.
AT&T made $90B last year, earning 11.9% return on equity. They have $2.57B cash on hand and $62B in debt.
Google, on the other hand, made $13.43B last year, earning 22.36% return on equity. They have $12.50B on hand and exactly $0.00 in debt.

AT&T and Verizon have 1/4 to 1/3 the free cash-on-hand to spend on this bandwidth auction that Google has. Worse for them, if Google wanted, they could split their stock 20-to-1 so that each of their $500 shares was suddenly worth 20 shares worth $25 each... their trading volume would go through the ROOF, their value would shoot up as smaller investors got in, and Google could issue 20% more stock without anyone noticing a thing because the high trading volumes would almost instantly counteract the dilution. Google could quadruple their bank accounts tomorrow by doing that. The only reason they haven't done it is because they (a) want to appear to be a respectable long-term company who doesn't care about short-term investors and their short-term desires and (b) haven't needed to raise an extra $30 Billion to out-bid AT&T/Verizon on anything before.

Most importantly, though, don't underestimate the bidding penalty that having $35 Billion or $62B in existing debt incurs for Verizon and AT&T. Google's astounding return-on-equity numbers and zero debt mean they could raise $30B overnight to add onto their bid for this spectrum. That'll be a neat trick for either Verizon or AT&T to pull off with their already-huge debt loads.

Cringley's flame-out scenario is laughable... instead, it's clear that Google is setting up the telcos in a game of chicken and essentially guaranteeing they'll be able to compete and play in this new bandwidth regardless of who wins the auction. By announcing early, and announcing 4 major consumer-friendly, industry-friendly preconditions that force openness and free competition on this bandwidth, Google sets up a situation where everyone else who steps up is going to be under a lot of "Why aren't they also promising to open up this bandwidth like Google is?"-type scrutiny.

Google doesn't have to win this auction to get enough Democrats in Congress angry off about the telcos locking down yet ANOTHER type of bandwidth the way they're doing to cellphone bandwidth. Already we're hearing calls in Congress to separate the phone & network businesses in the USA--to force Verizon, et al. to use a universal standard that any phone will work on. Just by raising the issue, Google signals the Dem-controlled Congress that Bush's FCC is up to something fishy which isn't in the interests of consumers. Pretty soon, these four conditions will be imposed from above by the FCC, rather from the bottom by bidders... and when that happens, winner or not, Google is guaranteed a seat at the table in this bandwidth.

You don't have to own the highway in order to drive on it. You just have to make sure it's not a private highway. THAT is what Google's up to here.

Propagandist | Jul 27, 2007 | 3:24PM

What if Yahoo! and Microsoft end up joining Google in outbidding the telcos/cablers? The enemy of my enemy's enemy maybe can be my friend? Once MS et al take out the telcos, they have a very big pie to divide up among themselves.

Michael | Jul 27, 2007 | 3:33PM

I agree with the statements of other posters, in that Google's primary business is in ad sales; they don't want to be an ISP. But they need bandwidth for two reasoins related to that primary purpose.

1) They need internal data distribution from their central search cluster(s) to distributed data centers. Though this is internal infrastructure, it's huge and they are crippled if they can't move bits to the data centers fast enough.

2) They need bandwidth to connect eyeballs to their pages, because eyeballs + google pages = ad profit.

The net neutrality issue and maneuvering by Msoft and the telcos makes Google (rightfully) apprehensive that access to their sites or services might be squeezed out or put under tarrif. Their bid for open bandwidth is a defensive move to ensure that users can always reach them even if competitors gang up on them.

If Google succeeds in getting their conditions added to the sale, they win either way. They either own an open network with the right to resell (so they can farm out anything they don't use internally), or someone else buys the spectrum as "open", which will make it harder to lock out Google.

I don't pretend to know all the subtleties, but from a medium-informed geek perspective it seems to make good business sense.

nb

Norm | Jul 27, 2007 | 4:01PM

From what I know, 700Mhz is broadcast spectrum, not multicast. In order to transmit in this spectrum, television has invested lots of $ in very powerful transmitters. Is a practical residential device going to tranmit in this spectrum. It seems like this would be a requirement for multicast(Internet)

Garrett | Jul 27, 2007 | 4:10PM

From what I know, 700Mhz is broadcast spectrum, not multicast. In order to transmit in this spectrum, television has invested lots of $ in very powerful transmitters. Is a practical residential device going to tranmit in this spectrum. It seems like this would be a requirement for multicast(Internet)

Garrett | Jul 27, 2007 | 4:11PM

Regardless of who wins this auction, I really hope that the FCC to require more openness in the wireless universe and takes it into account in awarding the spectrum. The current situation less than optimal for the consumer, what with being locked into long term plans with handsets that are crippled at the direction of the providers.

I don't know if it really makes sense to sell the spectrum to the highest bidder. Maybe the government should lease it out to people based on their ideas for making creative use of the spectrum. After all, to the government, 10-20 billion is chump change, a few months of war fighting in Iraq. So basing the decision of who gets the spectrum purely on how much they will bid seems short sighted to me.

tanroof | Jul 27, 2007 | 4:11PM

Even if it's true, the picture Cringely paints is a damning indictment of a broken society.

Let's assume for a minute that the FCC agrees with the 4-point plan (and by what non-political excuse can they dismiss it?) I think those four points make 700MHz much less interesting for the incumbent carriers. They dictate a level of fairness, and, let's face it, these guys make a killing by being unfair. This should decrease the amount of money they want to pay for the spectrum, because it's going to be, in some ways, less valuable than the cellular bands where they have complete, unabated control.

Google's foolishness reminds me of a saying I saw: "The fool tries to change the world around him; the wise man works with the world he has ... therefore only fools change the world."

Bill McGonigle | Jul 27, 2007 | 4:18PM

I think this has more to do with their core search and advertising business than this column gives credit to. The holy grail is the merger of the computer and mobility. The iPhone is the first real attempt at this, but it has a problem: it's still tied to a closed network (AT&T).

Google is simply looking to cut out the middleman and control the wireless "last mile." As phones become more capable they'll only continue to empower the networks who control these devices via lock in tactics. Just look how much trouble Apple had w/the iPhone. This is why the phones don't do WiFi.

Google wants to cut AT&T and Verizon, etc, out of the picture. And if I can't, Google at least wants the FCC to impose openness on the highest bidder, again, to let Google in.

This isn't arrogance, it's simply a bold, forward looking vision.

Scott | Jul 27, 2007 | 5:25PM

How about another possibility. Google is laying its cards on the table to circumvent the telcos from convincing the FCC that it can't put such stipulations on the use of the bandwidth because nobody will bid on it.

Hard to believe a big evil corporation doesn't have a hidden agenda, but if there is one that doesn't, its Google.

mac84 | Jul 27, 2007 | 5:53PM

I see another reason that Google would proceed this way. They intend to buy the spectrum regardless of price. If they can get the FCC to agree to their conditions, they may very well knock off a bidder or two can't tolerate the restrictions. This would reduce competition for the spectrum and let them snatch it at a lower price.

sam ueckert | Jul 27, 2007 | 6:14PM

You may not be an idiot, but any intelligence you posses has failed to come to light in this article. Were Google to win the auction, they would lease the bandwidth to existing providers, since Google itself lacks the infrastructure.

Frankly, Google doesn't want to win the auction anyway. If you'd read the filing by Schmidt, you'd be fully aware of this fact. Their goal is to create facilitate an open wireless spectrum through which users could choose to use Google's services on their mobile devices instead of being forced to exclusively use their vendor's proprietary technology and services--think of it as "Net Equality" for your cell phone and PDA.

Mike Reynolds | Jul 27, 2007 | 6:57PM

So Google buys up bandwidth, Apple has an an iPhone, and AT&T only has a 5 year exclusive agreement. How much infrastructure can you build in 5 years?

yorik | Jul 27, 2007 | 8:47PM

Unless the major Telcos get the FCC to block Google from 700mhz bidding, why wouldn't Google bid 10, 20, 30+ Billion for this spectrum?

Wireless is the future of information, and Google wants to be the information provider. The FCC will deny Net Neutrality, so it's natural that Google will want to bypass fixed line internet and set wireless the way they want it.

Besides, wouldn't it be cool to be able to watch Youtube on our 20th century analog TV sets :)

CVOS Man | Jul 27, 2007 | 9:51PM

What if Google is simply thinking different and found some deep pockets to hatch a much larger plan?

Remember that Google in-car navigation system they were developing Volkswagen? Is it a stretch to think the plan isn't to develop this into a standalone appliance that can handle real time map updates, retrieve all the Google content and over a network they build-to-order, control, and are self-reliant on? They have demonstrated their apptitude in building out massive-scale data centers and applications to run on them, there's no reason they couldn't make this work too.

What if Google had a friend with deep pockets named Steve that had a snazzy new phone/internet appliance that currently runs on a crummy 2.5G network that has been the disappointment of many technophiles if for no other reason than the network utilized is too sub-standard to showcase the cool functionality underneath the hood. Four years and ten months left on a five year exclusive contract might just be enough time to procure and build out a new private network and an assortment of appliances to run on it. Also, what if the rumored Google phone was instead integrated into into the iPhone? Google has some of the coolest applications out there, it would be nice to see them wrapped in a slick, beautiful and useful interface. Better yet, what if they put Apple to task with combining the iPhone with the Google's navigation and other standalone products on a drawing board somewhere into some mega-convergence device? That would be powerful.

Further with all the dark fiber you have pointed out to us the past year or so that Google has been quietly snapping up, what about the possibility that the Google is perfecting their home plug-in internet appliance as the last mile high speed home connection over this spectrum. No more worry about other cable and phone companies throttling back bandwith for Google's content. It's not that difficult to imagine the emergence of a new telecom superpower coming seemingly out of no where. The war to stop them could indeed be over before the first shot is fired.

Controlling all this bandwith makes a lot of sense to Google since it would control the delivery channel for YouTube and iTunes content. Let's not forget that Google also has a friend with a Magical Kingdom chock full of content to distribute and happens to also have some deep pockets to help fund the revolution. As far as I can see, it plays to everyone's strengths. Google becomes the de-facto phone/data network for its own applications, Apple fuels the fire with kick-butt products to do things we haven't dreamed up yet, and Disney has first dibs on perhaps the first genuinely new content distribution instrument in decades.

It would be the hat trick: reliable high-speed network, cool beyond cool products to exploit it, and rich content delivery. This combination of companies could easily pull off a $20B+ investment and figure out building the infrastructure to their needs and standards. It's a massive risk from the outside looking in, but inside Google lies the deep thinkers that have probably been working this out for years to define what kind of company they are in the future. The brainpower, momentum, funding, will to do it, and the necessary bravado are already in place. From this could emerge a true communications superpower that most people would give a chance...even the French.

Carl Brinkman | Jul 27, 2007 | 10:06PM

Sometimes playing poker is about making the other guy do something stupid to harm himself, rather than hiding your intent to act.   Especially if there is a bigger stack at the table than either of you have. The FCC has that stack and it's called REGULATION.




It very well may not make business sense for a telco/cableco to attack Google. However, sometimes you go on the attack because you think it'll hurt the other guy more than what it'll cost you.




Suppose that this isn't about mobile access at all and has more to do with antagonizing the major ISPs into some clear violation of net neutrality or illegal subversion of fair competition, etc, etc. Now all the sudden the Net Neutrality debate isn't "a solution in search of a problem." And, bonus, if the telco/cableco activity inspires significant Net Neutrality legislation/regulation, then very likely the stipulations Google had wanted for the 700MHz spectrum get broadened to cover all communication mediums regardless. Instant win and guaranteed end to the NetNeut issue, at least for this round.

robinok | Jul 27, 2007 | 11:01PM

This is a good strategic move on Google's part, although I agree with Bob's caution. Dancing with the devil is always dangerous. Google knows that the last mile is their real Achilles heal. They have to have a solid Plan B in case there's a move on the part of the networks to reign them in. That's what all the dark fiber, spectrum, and data centers are for. Plumbing. But like he says, the telco's have DC in their pockets and the original reality distortion field surrounds the FCC. I actually think that they are playing both scenarios out. In either case, they make a bold move. If they don't win, they raise the price prohibitively expensive and saddle the telco's with a lot more debt that they don't need (recall that they are still struggling under all of this consolidation). If they do win, then they open the playing field up to more competition and give themselves some more potential last mile partners. Seems pretty shrewd to me as long as they don't get their throat cut somewhere else.

Scott Kozicki | Jul 27, 2007 | 11:22PM

You could sit here and pontificate on the actual intention of Google until cows come home, or until you run out of quotes from the Art of War to use. Certainly a number of scenarios are possible - and I am sure Google has played through a good number of them in their boardrooms already.


Divide and conquer - see what kind of strange bedfellows desperation will spawn.


All warfare(marketing, business accounting, religion and democracy - get the point) is based on deception - Never?!

Move not unless you see an advantage; use not your troops unless there is something to be gained - perhaps iGOOGLE is foretelling us something we are afraid to think. Perhaps MS and ATT will will form an unholy alliance and Google and Apple will become friends. Crazy I know but if we could glimpse into the future most of today's ideas would not sound so ludicrous.

Time will only tell, however, somehow I have a feeling that there is a greater strategy at play here and while everyone interested in this piece of the spectrum pie is doing some creative accounting trying to find money to pay for it, Google is moving to the second or third part of its offensive plan. Either way, I think Google will win this by simply forcing its opponents into making a mistake, a 10 or $20 billion mistake they can capitalize on. Maybe the spectrum is just a bait Google is using to distract its competition? Darn I can't wait for this to be over, it is like an episode of Lost, no one knows what will happen next, well no one buy me of course. I can tell you right now with a high degree of certainty that we are more than likely all wrong, very very wrong.

Tomek | Jul 28, 2007 | 3:36AM

You blew it this time because you left out critical info: Google's teaming with Sprint this week, Sprint's teaming with Clearwire last week. Thus Google has a surfeit of WiMax spectrum already available. It is in Googe's interest, though, for access to be cheaper so that more people can be reached and its ads can propogate. Only competition can drive down prices. People hate telcos and cable companies, but they're going to love Google for saving them money.

michael | Jul 28, 2007 | 10:52AM

"Boys" will be "boys". Now that the Boys at Google have their seat at the Polyarchy club, that runs the governments in USA, China and other countries; they want(need) to play the same power grab game.

The Google Boys want to play just like Jobs, Gates and others. It's just a big game of Monopoly. What else do you do when money really doesn't matter any more! They have enough money for a thousand lifetimes.

Cannuck | Jul 28, 2007 | 11:07AM

Google has acquired light years of dark fiber, is building enormous data centers. YouTube, web applications, and Gmail. Rumors of
a Google OS, PC, PDA, Cell Phone. Experiments
with free city-wide Wi-Fi in Mountain View and
other cities. With new spectrum for the "last mile",
they can replace everything: ISPs, network backbone, the desktop, pocket devices, applications, communications, entertainment, all web services, and grab all web income.

Randall Neff | Jul 28, 2007 | 12:01PM

Steve Jobs has already changed the rules with iPhone, the ultimate trojan in the cellular land.
IPhone is a really computer that will be hacked to
do what the users want whatever the FCC and the telcos want the game to be. The iPhone is spreading Internet rules in the
cellular land. Cellular protocols and architecture are very different from Internet protocols and architecture so it will be interesting to see how things will unfold.

Google just announces the rules
set up by the iPhone that the other players have failed to grasp.
In a devious world, being honest seems the ultimate deception.

Google is probably the only player smart enough to easily recoup the investment once the game is really open. In a changing world, you don't win
at being the best at the current game, you do it by inventing a new game.
Everywhere, connectivity and bandwidth is lacking so Google has a stake at improving that. Or at making sure that the entry price is so
high for other players that they will do stupid moves like trying to close the game to recoup their investments.

cognominal | Jul 28, 2007 | 12:11PM

Bob is right -- Google doesn't want the spectrum. If they did, they would have just quietly submitted bids. They also don't want to be a phone company, and they don't want to "attack" the phone/cable companies. Only morons like Microsoft even waste time thinking that way.




What google wants is cheap wireless broadband and cheap mobile devices. Then they can roll out location-based video ads -- the holy grail of advertising. Imagine if car and beer companies directed more of their 100's of billions of ad dollars to the internet, instead of the small amount they do now. Google imagines it. Yahoo imagines it (I know for a FACT). The major advertisers will only switch from TV to IP when video ads work as seamlessly.




Apple wants this too. Only they DO want to disrupt the device makers, isp's, and Microsoft as well. They are already IN those markets with apple tv, ipod, iphone and, of course, macs.




Where Bob is wrong, is thinking the phone companies can hurt Google by redirecting home pages to another search vendor. Google makes most of it's money on AdSense -- embedding ads directly in millions of web pages. Nobody can easily disrupt that, because it's based on relationships with those millions of businesses. Google works hard to make sure those relationships are a win/win. The business gets a good return on their investment in key words. All Google has to do to protect it's business is lower prices to keep out competitors. You see, they have a monopoly on this and can protect it the same way other monopolies do.

Mark | Jul 28, 2007 | 3:49PM

A third possibility for Google: they want to put the option into the publice conciousness.
Yesterday I heard a story on this on NPR, and the commentator said as much. Google's bid would, if adopted, allow users to have device freedom on their phones such as they have now on internet PCs. Today people take for granted current phone restrictions as "that's the way life is", and don't ask themselves why can't I use my phone on different carriers, why can't I get my email or ringtones from a 3rd party," etc. etc.
If as you say Google doesn't believe they can get the spectrum, maybe they feel that by putting this option in the public thought domain, they can help influence the outcome.

dustbunny44 | Jul 28, 2007 | 4:44PM

Cannuck --

Thank you for stating the obvious further above. In this country economics and governance serve mainly as rich boys' games (with the occasional female or minority CEO to leave the impression of diversity amidst the corporate pillaging). As has been said, everything in our culture is up for sale.

In a more rational and considerate social climate, land lines and the wireless spectrum would be managed as public resources to be shared by all, the way that rivers, mountains and forests are supposed to be (ideally!) under environmental and land management rules. The FCC, or its equivalent, would function as stewards to ensure the widest possible public access to this resource for the lowest possible financial and social cost -- and NOT as a federally funded version of Lloyd's of London which auctions communication monopolies to the highest bidder. J.P. Morgan and Jay Gould probably roll in their graves with envy; the gilded cage is more so than it ever was in the late 19th century.

Private businesses should participate within carefully regulated roles as players who help enhance a wireless spectrum under public or community ownership -- at a limited profit. Americans often forget, or are simply never told in classroom history classes, that corporations originated as extremely regulated tools created by governments to achieve specific social purposes. The eventual "freeing" of corporations from servitude to social missions led to our current Aspergers-like devotion to maximizing profit, no matter what the cost. I live in Detroit, which has evolved into a gigantic theme park for the social costs of (automotive) corporate behavior. Kind of hard to get this long-term trend back inside its Pandora's box, yet we should try.

Across from Windsor | Jul 28, 2007 | 4:50PM

Goo isn't helpless against the telcos. Goo owns lots of dark fiber. Fiber is power. No doubt Sprint packets will be carried by some of that fiber soon.

Goo is in the business of giving things away in exchange for the data, which is used to sell perfectly targetted ads. When we're all downloading tonights TV viewing from the Goo Network, they will be the ones selling advertising on it.

webzen | Jul 28, 2007 | 9:26PM

Google clueless in DC? Gore is a special advisor to Google and a Director of Apple. Superinformation Highway, anyone? 700Mhz is certainly one, as long as it is kept open. The elections next year might rid the FCC of the Bush/incombent cronies just in time for the auction.

In addition to having way more cash than the incumbents (and zero debt, Google also have powerful partners (Apple/Disney, Sprint) and if they win the frequencies they would let local IPS get into the cellular business, which would also finance most of the cost of building the network. Fiber they already have aplenty...

Google played their hand beautifully - they have already changed the game permanently. They made sure less consumer money will be spent for access - which means more can be spent on services, all while strengthening their position as consumer heroes. Do no evil!

jon | Jul 29, 2007 | 1:39AM

"What if Verizon, and AT&T, and Comcast, and half a dozen other huge broadband ISPs suddenly cut deals with some search company other than Google and your ISP-supplied browser and homepage no longer give such prominence to Google? The G-folk have rabid competitors who would very much like to take over that top spot. Would we even notice? How different are the search results these days from one engine to another? Not very different."

This is ludicrous. Ask British Telecom. They did a deal with Yahoo to make it the default search on their portal. So people just don't use their portal. The Google brand is far stronger than you realize. People don't "google" (Oxford English for search) on Yahoo. If you think the search results don't differ much, you are again sadly mistaken. You obnoxiously underestimate people when you think they wouldn't notice.

Michael | Jul 29, 2007 | 1:40AM

Rookie question but, if we grant, as you assert, that Google wouldn't or couldn't reasonably expect to win a bidding war for the spectrum, might throwing in a couple bids or jump starting the process force the opposing bidders to pay more? Would that not be good for Google?

esome | Jul 29, 2007 | 2:43PM

Howdy Bob,

Long time reader here, from back when you published on Wednesdays. Those were the days.

I'm not sure I agree with you here Bob. I mean I agree in principle that the companies at play are some pretty vicious players.

I think what Google did here was a pretty decent calculated move. If it got the concessions it asked for incumbent in the sale, it wouldn't have to bid at all, it would have already won by default. It would have won simply because the winning bidder would have to open it up to third parties, at which point Google offers it's services for a cut of the ad revenue.

Google gets what it wants without spending a dime on bidding.

I'll bet it's got a ton of business propositions ready to shove under the potential winners nose. Faced with the need to recoup the money it paid for the spectrum a Google partnership would look pretty good to the spectrum winner.

Digitalones | Jul 29, 2007 | 3:45PM

What if this is not a game of poker? What if it is a game of chess?

Google says: "Here is a cool 4.6 billion dollars. I want open spectrum and open everything if I win".

Like you said, all the telcos jump on that spectrum and start bidding like crazy, hoping to block Google. Billions of dollars disappear into thin air (almost litterally).

When the smoke comes down and one telco has won, Google announces it will now open its own fiber optic network, because... Well, because it can, and because it has been quietly buying dark fiber like crazy. And, remember, they have google plexes almost everywhere now. And they already offer search, mail, chat, calendar and several desktop applications, not to mention map and a few other cool apps: why not offer open network to its clients?

All of a sudden, telcos and the big ISPs realize they have been out-flanked and out-smarted. Again. And too late. Google suddenly becomes the #1 brand on the Internet, bigger than Verizon, Comcast, AOL and all the other big names.

So: what if this is a game of chess, and this bidding is just a gambit, a way for Google to open up the game and trap its enemies into a futile war for expensive radio spectrum? That would make sense, at least to my unexperienced mind.

Noryungi | Jul 29, 2007 | 7:18PM

Couldn't this just be an opening argument in the court of public opinion? Assume they never bid above the reserve and a Telco wins the prize. I can see a very effective stink being made about how they tried to break the silly cell-phone monopoly but the Telcos bought their way into the status quo of locking-out VoIP. I can imagine myself getting all bent out of shape when I read that headline. Heck, maybe I even write to my Senators.

pickle | Jul 30, 2007 | 12:48AM

If you think of Google as "don't be evil" and assume that the telco's are stealing their customer's money (a worldwide practice) then I believe that Google is indeed playing a large game of chess to kill the bad boys.
I have no insight on who has the best strategy but I surely hope that Google will succeed.

Peter | Jul 30, 2007 | 8:34AM

When you take a closer look at the wireless situation in Europe, one can see many competing companies in all layers of the business stack. It offers customers loads of choice and low prices for what they are looking for. And the companies selling the products/services are still making money IF they have good operational execution. My bet is that Eric Schmidt & Co were in Europe, saw this and said: "We should have this too in the USA". And when everybody has access without the restricted communication channel(s) more ad dollars will flow to the web away from where it is now. Go Google Go!

just an opinion | Jul 30, 2007 | 9:00AM

One explanation for all this could be the list of investors in the MTLD consortium: . No idea, since I don't work for Google. But so far, only a few of the people actually involved in that thing get the potential, and I am reasonably sure that Google is one of them.

Acowymous Nonherd | Jul 30, 2007 | 2:12PM

The URL I was intending to post was http://mtld.mobi/company/about. Dunno why it didn't make it last time.

Acoymous Nonherd | Jul 30, 2007 | 2:56PM

Google might not have the market capitalization of AT&T (although it is higher than Verizon), but they have absolutely no debt. AT&T has a debt/equity ratio of 0.55x, and Verizon a ratio of 0.71x.

If they really want to do it, Google can out-bit the telcos, or even worse, force them to *cooperate* with each other!

Patrick | Jul 30, 2007 | 4:53PM

What if all the talk between Apple and Google really is a joint effort to open this space up. Then the combined strength could bid $20B and Apple can transform it's iPhone. Hmmm....

MeHere | Jul 30, 2007 | 6:00PM

Well as far as your prediction of google being a big looser on this one, I am still waiting for IBM to lay off 125,000 people. So given your track record, if I was to bet, I would always take the opposite of your prediction.

mikec | Jul 30, 2007 | 7:33PM

Google's made some big decisions in the past so it's a bit rash to say they are being careless. They've shown the public who cares about open devices and open networks--and it's not AT&T or Verizon. Now that everyone knows where each party stands, Google has again shown it's "don't be evil" mantra. And who would keep Verizon or AT&T if Google offered an open network? They would steal the market and there's no questioning it. More power too them.

John | Jul 30, 2007 | 9:39PM

Maybe google just intend to put openness on the agenda for the FCC and get everyone talking about it as an important thing. It seems morally the obvious proper way of doing things, and it's only corporate greed that makes companies want to keep it closed. Google's "good guy" image is perhaps not just an image.

They have the clout to make politicians think.

Jesse Pepper | Jul 31, 2007 | 6:55AM

Silicon Valley plays high-risk/high-reward games. Google knows that doing nothing means that, over time, these companies will own them.

Google has risked all on a roll of the dice to break the emerging stranglehold over its content and services. It's a gutsy move. It may not work, but the rewards for Google if it succeeds are also great.

Harold Feld | Jul 31, 2007 | 9:17AM

I am really not sure why Google would want this spectrum. Yes, it goes through concrete "like butter" and it has considerably better range. But compared to higher frequencies there is just not all that much of it compared to the WiMAX frequencies 2.5GHz and 3.5GHz etc. So, while it's good for narrowband communications like voice it sucks for broadband. So it should be worth much more for a narrow bander than to Google. And therefore Google cannot afford to buy it - even if they win!

Christopher | Jul 31, 2007 | 9:29AM

One has to wonder with Google and Apple cozying up of late if Apple's standing behind Google's plans, too. If only Apple had some sort of cutting-edge mobile telecommunications device to use on this spectrum... some sort of... phone...

Maybe then Apple would cosign Google's note. And where Apple goes after that could be mind-boggling. I mean, imagine if Apple ever came up with some sort of wireless TV set-top box that enabled video-on demand. Heck, call it "Apple TV" and build the brand and use Google or iTunes with ad-supported content to offer choices on what to view and how. (No cables or satellites!) No, you have to wonder if Google has "one more thing..." and that being Apple's financial and technology resources to give this spectrum meaning... *Nahhhhhhhhhh.*

Jodeo | Jul 31, 2007 | 2:20PM

It is my understanding that these FCC auctions are broken into ranges, typically 10 to 20 Mhz, and regions. There are also national licenses but still sold in 10 Mhz bands. Thus, this is not a total win or lose situation. Google could end up with a license for 720 to 729 Mhz and AT&T could get 730 to 739 Mhz, etc.

Is that not correct?

Terry | Jul 31, 2007 | 4:12PM

I have been performing experiments in my garage, and as far as I can tell, butter does not go through concrete very well at all. I hope 700MHz fares butter. I mean better.

John | Jul 31, 2007 | 4:59PM

"Maybe then Apple would cosign Google's note. And where Apple goes after that could be mind-boggling. I mean, imagine if Apple ever came up with some sort of wireless TV set-top box that enabled video-on demand. Heck, call it "Apple TV" ...

Google does NOT need Apple to accomplish the same thing. People have been speculating Google would do this for a long time with Apple nowhere in the speculation.

In fact I would argue that Apple would make a lousy technology partner for a number of reasons.

The devices they propose would probably be under powered, under featured, cost too much, and the resistance people in general have to Apple brings too much negative to the table. Most of the people I associate with would never buy an Apple branded product.

Google would be better off going with Asian technology, and manufacturing companies and self branding.

digitalones | Jul 31, 2007 | 10:46PM


I think this is a very interesting move on Google's part. I also think that underestimating the company is a bad move. Let's say that they are serious. They have the cash to do this - why not?

Apple has already upset the telephone game with the Iphone (and Google is fixing YouTube to work with it). Right now AT&T has a lock on the Iphone for a period - I can't remember how long, but I can see a future upgrade to it that would allow it to work in this spectrum.

Or maybe Google intends to offer free wireless internet throughout the US? They could afford to do this - not many other companies could. Of course this would wipe out a lot of shareholder value at cable/phone companies who offer what is often crappy internet access.

I don't know what they plan to do. I do know that they've not lost money yet, which indicates a certain amount of intelligence. Underestimating them could be dangerous for the Telcos.

Wayne

Wayne | Jul 31, 2007 | 11:24PM

You're wrong. Google has to try. We all have to at least try.

mark | Aug 01, 2007 | 1:47PM

Hi Bob,

Personally I think you've seriously under estimated Google's chances on this one. The 700 MHz band is not the be all and end all of available spectrum, although its very close ;-)

If Goggle can't have it all, they can at least drive the cost to prohibitive or damaging levels for their competitors. Then deploy a last mile solution of their own and carve them all a brand new bodily orifice while their competitors are cash weak. All of their moves too date would indicate they intend to devour the last mile and cut the ISPs and Telcos out of the equation.(Let us Pray!) Its not even an all or nothing gambit for Google. Worst case scenario, they end up armed to the teeth which is never a bad situation given their competitors penchant for ruthlessness.

All the best, Dan

Dan Graham | Aug 02, 2007 | 6:13PM

yeh must be to many expats working for google getting fed up with the USA's third world bag of shite telecoms system.

just do LLU FFS and break the local monopoly

maurice | Aug 03, 2007 | 8:52AM

I take it from your description of the "poker" scenario that this is a sealed bid auction - each interested party delivers their bid by a certain time, the bids are opened and the highest wins.

It seems that the most likely outcome is that the FCC will ignore Google's proposed rules. In which case I don't think the telcos will perceive Google as a significant threat and the status quo will remain the same.

I do believe that the FCC should accept Google's rules. The rules Google proposes seem to me to be the most inline with the public interest in the spectrum which the FCC is supposed to protect. If Google's rules are adopted, the game is quite interesting. Either a company that embraces an open network moves in and changes the mobile game or the telcos buy it and build out a low performance network so consumers see an advantage to their proprietary networks. Either way the telcos are mad at Google for getting the rules changed and damaging their business model.

The telcos will probably try to convince the FCC that an open network would cause performance issues that are not in the public's best interest for this spectrum. If they lose the lobby, but win the auction, they will likely build out the network in a way that lets them turn around to the FCC saying 'told you so' and ask the FCC to change the rules.

David Robarts | Aug 03, 2007 | 12:13PM

I recently was told this story regarding spectrum space. A muckety Muck at Orbital Sciences / Space data bought a band a long time ago. Now he sells of spectrum space from time to time to rase capital at a price much higher than when he bought. Is it possible that Google can buy this sprectrum space and then resell with the stipulation that the networks placed on it will be open ones ? Thus becoming a spectral HOA ( home owners association )

Fred :)

Fred | Aug 06, 2007 | 12:51PM