Google the wireless broadband carrier?

Stan Beer
Sunday, 22 July 2007 16:40

Business IT - Networking

Google intends to be a player in the mobile phone carrier space, with a commitment to put up US$4.6 billion or more. But first Google wants the Federal Communications Commission (FCC) to level the playing field between newcomers and incumbent carriers such as Verizon and AT&T in the forthcoming auction for the right to build a wireless broadband network in the newly available 700Mhz spectrum .

According to Google, wireless mobile phone spectrum in the US is controlled by a privileged few companies. The search company believes what will be the most significant auction of wireless spectrum in US history would heavily favor the incumbents and in turn disadvantage consumers unless strict conditions are placed on the granting of licenses.

In a 9-page submission to the FCC, Richard S Whitt, Washington Telecom and Media Counsel for Google, made the search company's position clear by stating: "the would-be new entrants should not be aligned with either an incumbent wireline carrier or incumbent wireless carrier. Those carriers, quite rationally, seek to extend and protect their legacy business models, and in particular not take any actions that  would jeopardize existing and future revenue streams.

"The incumbent carriers have an embedded national network of towers, backhaul, customers, retail outlets, and advertising. The incumbents also have far more ready cash flow at hand, and the willingness to spend it in furtherance of existing business plans. Consequently, the spectrum simply has more economic value and overall usefulness to incumbents like Verizon or AT&T, than to a would-be new entrant like Google."

In order to level the playing field, Google is seeking to have four major conditions imposed on the granting of a license to provide wireless broadband in the 700Mhz spectrum:

1) Licensees must not limit or block end users from downloading any legal software applications, such as Skype;

2) Licensees must not lock individual handsets to specific wireless networks;

3) Licensees should be required to sell wholesale service to resellers on non-discriminatory commercial tems and conditions;

4) Licensees must open their wireless networks to enable third parties such as ISPs to interconnect.

To put it simply, the incumbents don't like these conditions at all. As a case in point, the recent iPhone deal between Apple and AT&T would not be possible in the 700Mhz spectrum if Google's proposals were adopted.

Looking at it from the carriers' point of view, they believe they are quite justified in maintaining the high barriers to entry into their market space as they have invested considerable resources into their existing infrastructure. The opposing view, represented by Google however, believes that keeping new entrants from the wireless broadband market is stultifying progress and disadvantaging consumers by limiting competition.