Google May Enter 700-MHz AuctionThursday, May 24, 2007
The big news today, at least in the wireless industry, is that Google has finally admitted they might be interested in showing up at the 700-MHz license auction. They certainly have deep pockets and could impact the future of wireless, for better or worse.
Is Google going to go after spectrum on a nationwide basis, build out a wireless network and then give the service away to their customers? Google’s only business model, today, is to sell our eyeballs to advertisers. I have often wondered why they don't monetize some of their existing products and services, but for now they seem to be happy with making money on clicks, even as new reports surface that there are a lot of “click” abuses and that a percentage of clicks, somewhere between 10-20%, are fraudulent, for whatever reason.
So far, we have heard that Google may be getting ready to launch a Google phone, they have provided a free Wi-Fi network in Menlo Park that has no customer care available (except on the Web and if you can’t get to the Web how do you access it?) and they are working on several other muni Wi-Fi bids and proposals.
One of the statements made in some of the articles I have read about why the 700-MHz band is such a great portion of the spectrum are right—radio signals in this band do travel further and do penetrate buildings better―but, and here is the catch, the only way to increase capacity on a wireless network is to add more channels or bandwidth at a given site or put new sites in that are closer together. Each cell sector has a finite amount of bandwidth available to it and it is shared access bandwidth.
But wireless is hot, everyone wants a piece of the wireless pie and, as we have seen, companies such as Intel have a huge appetite for wireless as evidenced by the amount of money being put into WiMAX to try to ensure its success.
I have long predicted that Google, Yahoo! and perhaps even Microsoft would show up at the 700-MHz auctions and that if they win some or all of the licenses, it could forever change the face of the wireless industry as we know it.
However, if these companies are interested in the “mobile Internet” and that is the reason they are going after the spectrum, I think they might be in for a rude awakening. Voice pays the bills for wireless services today—I know, I say that all the time, but it is true. There are 300 million potential customers in the United States today, 240 million of whom already have at least wireless voice service. And we have the winners of the AWS spectrum, besides T-Mobile and the Sprint/cable company joint venture (which I believe is now Pivot).
The mobile Internet is going to be a very different Internet from the desktop Internet, although I don’t believe those who are on today’s Internet believe that to be true. Wireless is not about sitting for hours in front of a screen with a big keyboard and a big pipe directly to the Internet. Mobile is about having a few minutes here and there and needing to get information that is 100% relevant, 100% of the time. What is now standard practice on the wired Internet will not work when the world moves to the mobile Internet.
Google has a great track record doing what it does best, and it is buying companies and expanding its portfolio of services almost every month. But with the exception of the Menlo Park Wi-Fi system, which I would certainly not classify as a reliable system, it has never been in the transport business. This could prove to be interesting.
In any event, I am of the mind that those that win the spectrum in the 700-MHz auctions will not necessarily be the ones that build out a system on it and put it into commercial service. Instead, I see the 700-MHz spectrum, at least for the newcomers, as currency with which they can buy their way into wireless, most likely with people who do wireless for a living.
I think some of those that already won some of the AWS spectrum at the auctions this year will be doing the same thing. Spectrum, a finite resource, is becoming a currency of its own. Google certainly has enough bucks in the bank, so perhaps it now wants to purchase the gold of the 21st century: spectrum.