Google to Join Spectrum Auction

By BRAD STONE

Published: December 1, 2007

SAN FRANCISCO, Nov. 30 — Seeking to shake up the wireless industry, Google said Friday that it was preparing to take part in the federal government’s auction of radio frequencies that could be used to deliver the next generation of Internet and mobile phone services to consumers.

Google said it would file its application on Monday to bid on the valuable 700-megahertz spectrum, which is being vacated by television networks as they convert their signals to digital. The formal bidding process is scheduled to begin on Jan. 24.

Google has said it will bid for the so-called C Block of the auction, which it could use to offer nationwide wireless broadband service that competes with digital subscriber line service and cable Internet access. Other bidders are expected to file their intentions with the Federal Communications Commission on Monday. Both AT&T and Verizon Wireless have indicated that they will also bid on the spectrum. Industry analysts also expect major cable operators to bid for some of the smaller pieces of the spectrum.

Whoever wins, the auction is expected to usher in a new wave of flexible wireless computing. Bowing to consumers groups and Internet companies like Google, F.C.C. commissioners mandated that the companies that win the new spectrum must give consumers the right to use any compatible device on the network and to use any software applications they choose on that device.

The major mobile operators currently restrict consumers’ choices on the devices and software they can use on a wireless network. Earlier this week though, Verizon Wireless said it would move to make its network more open next year. That will allow consumers to buy compatible phones outside of Verizon stores and software developers to write programs for those phones without Verizon’s permission.

Ben Scott, policy director of Free Press, a Washington advocacy group, said that the F.C.C.’s rules would make the world of wireless more closely resemble traditional computing. “It’s the first time the commission has put a condition on a spectrum license that recognizes that increasingly the mobile platform isn’t telephone service anymore, it’s a mobile computer,” he said.

Eric E. Schmidt, chief executive of Google, said in a statement that Google thought that it was important “to put our money where our principles are.”

“Consumers deserve more competition and innovation than they have in today’s wireless world,” he said.

Google has made developing a wireless strategy a priority. Earlier this month, it announced Android, an open-source mobile phone platform that can be used by handset makers and wireless operators to develop new wireless services.

Rules for the auction are mind-numbingly complex. Put simply, bidders submit their bids electronically and anonymously. The F.C.C.’s anticollusion rules will prevent participants from discussing their strategy after bidding begins.

The auction ends when all five auction blocks have been sold, a process that could take months. The auction is expected to raise $15 billion or more for the government.

A Google spokesman said that if the company prevailed, it could lease the spectrum, offer wholesale Internet service through other companies or operate a nationwide wireless Internet network that would compete with DSL and cable Internet access.

Some analysts think that Google does not actually want to win the auction and become a wireless operator, but seeks only to stimulate the change needed to make mobile devices safe for its own services and ads. Earlier this week, analysts for Goldman Sachs reinforced this view and said that Google winning the auction and getting into the expensive and relatively unprofitable wireless business constitutes a risk for investors.

Blair Levin, managing director at Stifel Nicolaus and former chief of staff at the F.C.C., said he thought that there was an ongoing debate at Google on this issue, between advocates for openness and those who thought the company could build a better wireless service and out-innovate the rest of the industry.

“The side at Google that only wants to ensure open conditions will ultimately win out,” he said. “But that is very much like predicting the outcome of a football game before the game begins.”