I was very pleased to see Google publicly wade into the upcoming FCC auctions for the 700MHz spectrum that will occur early next year. Should all go well, the new spectrum could be used to create a new open-access wireless broadband “pipe” into people’s homes and devices. If things go less well, the existing wireless giants would buy the spectrum and impose similar usage restrictions that exist on cellular networks in the U.S. today, putting us further behind Europe and Asia.
CEO Eric Schmidt sent a letter to FCC Chairman Kevin Martin stating that they would commit to bid at least $4.6 billion in the auctions if four key platform rules are adopted. These rules will define what types of services the winner could offer, and would require third party access to the bandwidth:
- Open applications: Consumers should be able to download and utilize any software applications, content, or services they desire;
- Open devices: Consumers should be able to utilize a handheld communications device with whatever wireless network they prefer;
- Open services: Third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and
- Open networks: Third parties (like internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee’s wireless network.
Given the sorry state of the mobile landscape in the U.S., I’d expect the FCC to adopt these pro-consumer rules without any fuss. But the incumbent players, including AT&T and Verizon, are saying they are opposed to open access and may not participate if these rules are adopted. Google’s public move was made to let the FCC (and the public) know that there are companies very happy to bid in an open-access world.
AT&T’s response to Google’s letter was breathtaking in its audacity:
Not satisfied with a compromise proposal from Chairman Martin that meets most of its conditions, Google has now delivered an all or nothing ultimatum to the U.S. Government, insisting that every single one of their conditions “must” be met or they will not participate in the spectrum auction. Google is demanding the Government stack the deck in its favor, limit competing bids, and effectively force wireless carriers to alter their business models to Google’s liking. We would repeat that Google should put up or shut up— they can bid and enter the wireless market with any business model they prefer, then let consumers decide which model they like best.
For anyone who doesn’t look too closely at the issue, AT&T’s response seems very reasonable: keep government regulation out of the spectrum let the market decide which services win. But that isn’t really what would happen at all. If fewer government restrictions are placed on the bandwidth the auction winners will be able to extract more profits at the expense of competitors and consumers. So naturally they don’t want to see open access rules like those recommended by Google. The incumbents also don’t want to see Google play in their sandbox and bidding against them – so they have yet another reason to oppose their proposal.
The FCC has competing goals of maximizing revenue from the auction (suggesting less regulation) and protecting the public (suggesting more rules to force competition). Having open access requirements like those suggested by Google will spur competition and grow an economy around this spectrum. It will also put commercial pressure on mobile operators and broadband companies to reduce the restrictions they have on current broadband and mobile services.
Google isn’t always not evil, but in this case they are going to bat for all of us against some players with pretty bad history when it comes to offering consumer products. I’m behind them on this. And to the FCC: please learn from past mistakes, ignore the lobbyists this time, and do what is in the best interests of the public.
Plain and simple, The Google wants to serve ADS OVER THE 700MHZ spectrum. Open services is a euphemism for AdSense and aggressive data collection on data channels that they currently cannot access. So yes, Google is stacking the deck in its favor and that as always is less and less pro consumer and more and more pro advertisement.
This is a very thorough update, well researched. But it is troubling when any giant issues an all or nothing ultimatum and can set a bad precedent if they are catered to.
Has Google grown to a point in its ten year history that it has more influence with the FCC than Verizon or ATT?
Hope this Post gets maximum attention
http://digg.com...hing_Ultimatums
@Jason, So advertisements are anti-consumer? I disagree.
We have had the “MS Model” where you pay for products like Office, and the “Google Model” where we endure advertisements for free products.
I would like the option for either “Model” in the wireless realm. Not just another part of the spectrum that I pay $ to utilize.
@AT&T, “Put up or shut up”?
How about, “at least $4.6 billion”?
What is your number?
The airwaves are owned by THE PEOPLE (or so they say).
@Search*Engines WEB, Are you sure digg provides users that have informative input? Yes, MA seems to like the traffic., but “no thanks”; never led to comment threads that are well-reasoned or insightful. Please stop with these submissions to that.
Yes, this will be a HUGE decision.
The Google juggernaut is nearly out of control. If their sending a letter of demand (This must happen or we won’t play…) to the FCC isn’t proof of that I’m not certain what is.
SEW – I didn’t read it as an all-or-nothing ultimatum (although AT&T says it is). It is simply a public statement of the rules under which they guarantee they’ll participate. Nowhere do they say they won’t participate under other rules. And even if they did, it’s their choice. There are lots of other players in the market to counterbalance their relative weight.
bdb – I agree totally. Google just put up, and shows that they are willing to bid in a model that guarantees less profits by forcing openness. All AT&T has to offer back is words and factually incorrect accusations.
B. Durant – Google made no such demand.
Given the sorry state of the mobile landscape in the U.S. suffice it to say that if the FCC does not adopt open access for 700MHz Europe and Asia will eat our broadband wireless adoption lunch. Then watch more US company technology investments go overseas.
How much new technology can 2 monopolies buy vs an open access playing field ?
BTW, the US spends $500B on defense ( also to a small list of monopolies ) to feed its superpower image.
So FCC Chrm Martin what’s it going to be – more crony capitalism or open capitalism that this country used to have ?
The wireless carriers are correct in this instance. Keep in mind that it pains me to admit that.
Yes, if Google believes that the conditions they laid out are best for the market, then they can offer their products, on the spectrum they win, on the terms they outlined. Users will choose which model they like the best. Google will have all kinds of cool new features enabled by mobile handset data mining. An easy to use social network based on data in my phone’s contact list, that would be cool. Right? That’s pro consumer. Of course I’ll have to take Shameequa’s phone number out of my contact list . . . uh . . . just ’cause. Let’s not forget the ability to monitor my text messages and provide me with useful product suggestions based on the content and recipient. Like the link to ‘blackgirlswholikenerdywhiteguys.com’ whenever I message Shameequa for instance. Oh!!! My personal favorite feature will be the GPS data mining for real time location tracking on Google maps. You know . . . the ‘Click To Stalk’ feature of Google maps. AWESOME!!!
I realize how many WONDERFUL features Google has planned for me. I just think that they should offer their own service with those features, and let the current providers offer services without them. It’s a free country . . .
for now.
bilbo0s – the spectrum is alloted BEFORE these services are offered. By the time the consumer gets to choose the winners have already won. Openness needs to be decided before bids are taken. Otherwise, the guys planning on closed, bleed-the-consumer-dry products will be able to bid more because the revenue will justify it.
A few of the comments herein fail to grasp the big picture here. Although I’m sure Google would ultimately serve ads over 700Mhz if all goes as they’d like, the real issue here is that they want people to be able to access their (or any provider’s) services from various mobile platforms. The 700Mhz block is the last remaining spectrum that could offer this in the US without a major reallocation (which won’t happen). If the net is about the ability to level the playing field for the little guy, then we should all hope that this spectrum becomes open. History suggests that monoplies will place Wall St. interest before consumer interests. Without some open spectrum then we will never be able to do what Korea and Europe can do. To let the telcos have their way on this one would be a negative for the consumer.
I don’t know much about the wireless spectrum…Can Google buy all of the 700Mhz auction, and resell it as an open network?
I think Jeff has it right, particularly considering consideration by AT&T and others to assess fees on content providers (AT&T considering content providers as freeriders). It will be interesting to see how the FCC acts.
A posting from the University of Chicago Law School Blog further examines the design of the auction:
http://lawocrac...spectrum-gambit
The telco business model can not handle this kind of disruption. Google’s approach will help Wall Street and the consumer, we have seen it work online for many moons. AT&T is under attack, and they will not back off easily.
Anyone know when the FCC will rule on this finally?
This is honestly the best article I’ve seen on any blog in at least three months. Finally, something useful to read about
I agree with Google on this. I worked in telecom infrastructure for a long time and have heard all kinds of things about how the carriers operate. I think it’d be great to see things open up.
On a side note, it’s interesting that in this moment, telecom carriers and companies are competing with web companies. British Telecom announced last year its new web services would directly compete with Google. What an interesting world we’re in right now. It’s very cool.
“Google isn’t always not evil..” Ouch! My elementary school English teacher is grinding her teeth. Try rewriting the double-negative as “Google is sometimes evil…”
Mike – your re-write doesn’t convey the message I intend.
Why the hell does the “grammar police” have to come out in every post? It’s annoying as hell. It’s a blog, it isn’t a novel, there must be a lot of perfect SOB’s out there, because there’s plenty here that can only manage to call out Michael with grammar flaws!
@ Chris, I agree. Blog posts are intended to be conversational. I hate having to weed through all the grammar comments.
Though I prefer non-regulated environments where the market is supposed to exercise its choice I don’t see how the market would exercise its choice if the winner of the auction only offers a closed system. So I vote for an open system.
Google is a business and not a philanthropical organization so it is likely making a proposal that will generate profits for Google if it wins the auction.
If Warren Buffet’s fortune is to go to philantropy:
http://money.cn...dex.htm?cnn=yes
this would be a good place to allocate money to. Let Warren Buffet bid, win and help establish a true open system.
I personally would like to get a phone/PDA from any vendor that rides on technology that can penetrate through walls and offer excellent reception quality and bandwidth:
http://mrtmag.c..._mhz/index.html
RAUL
“Less profits by forcing openness?” I doubt it. The arrogant “Don’t Be Evil” mantra of Google shouldn’t be believed by anyone anymore. I don’t have a problem with Google expanding and becoming more successful, but why does anyone still attribute altruistic motives to Google any more?
@ Brandon, even if Google had sinister motives in this, it still doesn’t mean Google will dominate in mobile – we all know Google doesn’t always ace new initiatives, even when it tries
I think it’ll open up a lot more innovation and options across the board. It’ll be interesting to see how this plays out.
I have not read any of the comments above, so, I am sorry if I am repetitive of someone else’s comment – I just do not feel like reading beyond the posting
I do not think that Google is batting for us. I think they are just doing what they need to preserve their business model over other. Open anything is very much part of their business model, thus, they are trying to “push” that onto other mediums.
I happen to agree with Google in many of they business moves – not all. And “do no evil” can be a very subjective thing. Google is a business and that is all.
Google is trying to turn the wireless world into more of the internet world, where access to development and content is almost universal and fairly cheap. That is a world in which they have won, and most intelligent people would say if wireless turns into that world, Google will will again (and Google is betting $4.6B that this will happen). But in a truly open network, what is stopping Microsoft, or some other future Google Killer from simply providing better mobile applications on the 700Mhz spectrum? Yahoo, for example, currently makes much better mobile apps than Google IMHO.
The real power of the open 700 Mhz frequency is that there is no “ISP” on this frequency – and free mobile wireless broadband access is the holy grail of internet connectivity (WiMax??) – if Google becomes this ISP (by binding together applications), they will wield a lot of power, but the marketplace will be truly open for any smart apps developers to prosper.
My last words: If Google really wanted spectrum all to itself, it would just bid and win against Verizon and Cingular – no letter required. The company could theoretically borrow $100B in a heartbeat to accomplish this. This is both a PR coup and also a smart business move (if they win…)
Hey, grammar police go somewhere else…
Stop destorying people’s future and dreams!!!
AT&T claim that Google’s requirement “limits competing bids” is a lie, intended to manipulate consumers and law-makers.
Google’s requirements keep the environment MORE open to competition, not less:
“Consumers should be able to:”
– “utilize any …services they desire”
-”utilize a handheld …device with whatever …network they prefer”
Is it not possible that Google’s best interest as a business is also in the consumer’s best interest? That definitely isn’t always the case with Google or any other business, but I’m with Michael on this one that I believe that it is definitely a win-win situation on the surface.
@Chris, Pat – I agree not to (further) detract from more important discussion as nitpicking can be annoying.
Ironically, the same people saying grammar does not matter would have a stroke if a web site was not W3C standards-compliant.
Mike A – You proved my point. Reading your informative posts should not require a decoder ring from Cap’n Crunch.
Hope everyone’s ‘future and dreams’ remain in tact! LOL
I dont know anything about wireless spectrum auctioning, but out of curiosity:
Are there google mobile services in Europe and Korea that are very useful to the end consumer, but simply dont exist here today?
I don’t think there has ever been a breach of public trust by Google, and since any other carrier could theoretically track everyones’ location and text messages to serve up ads (as has been suggested in other comments), these fears are unfounded. I will not deny that Google could make a lot of money out of this deal, but the demands they are making of the spectrum would basically make it, as has already been stated, more like the internet.
The current state of wireless service in America is terrible, but those who don’t study the issue will believe AT&T’s assertions that it’s state of the art! If you were to listen to their lobbyists (and one was actually on NPR’s Talk of the Nation this last week), you’d think that Google was going to steal taxpayer money directly (and kidnap our children, or something.). They’re pulling out the big guns on this one because they’re ready to request the brown pants, so to speak, from their first mates if Google starts providing phone service as open as the internet they advocate.
Don’t think for a second that if the rules aren’t adopted, Google won’t still bid on the spectrum. Also don’t think that ATT et al won’t bid if they are. The amount they will bid will change of course.
The important question is:
If the open rules are enforced, is the spectrum itself worth less to the government and to the purchaser?
Well it seems natural that a closed network would be more valuable to a purchaser as it would allow higher pricing via lack of competition and thus more profit. In turn, the government would get a higher initial payment for the spectrum.
However, if the spectrum is open to be accessed by 3rd party providers, more competition means lower margins and lower profit. So it seems that the government is going to get a lower initial payout. But depending on how the services are taxed, more providers mean more taxees which could mean over time a higher rate of return for the government.
Then you have to consider the fact that the government is not a corporation (haha) and its interests are not purely profit based. Obviously openness is in the public interest but how much does that mean these days.
At the very least companies who already have broadband distribution channels should be excluded from operating a closed network on the new spectrum.
correction– the requirement may limit competing bids from bidders who prefer a less competitive environment.
the result of google’s requirements may be bad for big mobile companies, but it will be good for consumers, because it will open up networks to smaller companies who would otherwise be blocked by a restricted network.
the requirements don’t “stack the deck” in google’s favor, as much as in consumers’ favor.
google is not the only entity proposing these conditions: “Some other groups, such as Frontline Wireless LLC, a company backed by luminaries including former FCC chief Reed Hundt and former Netscape CEO James Barksdale, have proposals similar to Google’s.”
http://www.wash...7072001869.html
relatedly, is there any doubt where google stands in the battle to keep the internet free and open to all players, providers, and consumers?
http://www.save...net-neutrality/
@9 your comments are offensive. have a little more taste..
As for ATT’s reponse, i’m surprised that the PR dept for such a large corp would retort in such a juvenile manner(ie,’..put up or shut up’). If they are so passionately against an open platform that they would reply in such a manner, do they really have much respect for consumers…I dont think i’ll be activating my iPhone via ATT afterall.
Either way it goes, it will be interesting to see how hight the bidding war will go…
http://www.pcwo...le/article.html
“Femtocells, an emerging technology for improving cellular coverage in homes and enterprises, have attracted the interest of none other than Google Inc.”
I applaud Google on this one – they are turning the tables on Telco’s. This is a net-neutrality watershed issue, the incumbents won’t open the walled garden, so Google decided to plant their own. It is brilliant.
An
I can’t believe these comments are so anti-Google. The US telecoms are some of the world’s worst companies. They seek not to provide a useful service to customers, but exclusively to extract money from them. Walled-garden networks, non-interoperable hardware, Byzantine contracts, and, after all that, the developed world’s WORST telecom service.
I agree Google isn’t always not evil (Mike I, you’re an idiot, btw — Google’s unofficial motto is “Don’t be evil”), but this is Google at its best. Sure, they’ll make plenty of ad money off this if it works out their way, and that doesn’t bother me at all — I am willing to pay, either in money or in attention to ads, for useful services. And, more importantly, Google will have created a more competitive telecom environment, and that benefits the consumer. Always.
Go Google!
Michael,
This is a very good summary of the issues. Obviously we should all assume that Google is acting in its own interests. But so are Verizon and AT&T. They deliberately appeal to our sense of fairness when they demand an auction without preconditions, because they know that – paradoxically – they have a built-in advantage in such an auction.
The incumbent carriers can build out a new network much faster and cheaper than a new entrant can, because they already have so much infrastructure. At the same time, they stand to lose a fortune if they allow a new entrant into the market, because the new entrant will take subscribers from them and force them to lower prices to keep the rest. The result is that unless the rules of the auction are somehow weighted in favor of new entrants, rational incumbents will *always* be able to bid more for the spectrum. That may sound like good news for the Treasury, but – again, paradoxically – it can result in less revenue. Why? Because knowing that they are going to lose, rational new entrants will not participate in the auction.
There are lots of way to weight an auction. In 1993, US regulators simply banned the incumbents from the auction altogether in most markets. In 2000 in the UK, the government raised over $50 billion by selling five nationwide 3G licenses at a time when there were only four incumbent carriers, guaranteeing that there would be at least one new entrant. Alternatively, we can impose rules that some new entrants like and the incumbents don’t; rules like open access.
Verizon and AT&T know that if there are no conditions attached to the 700 MHz auction, no rational business will bid against them for the spectrum because no rational business can afford to pay as much as they can. That’s why they’re asking for a ‘fair’ auction. Don’t be fooled.
I testified to Congress on open access last week. More here:
http://skydeck....mer-protection/
Jason
Do you have any idea how much lobbying money the telcos, CTIA and the NAB throw at congress?
I’d love tis to happen, but I’m not holding my breath.
google’s history proves that it likes to create products that are better for the consumer. i applaud that. google wants to make a profit without compromising the consumer experience. i applaud that too. and, they are offering to establish a base level of revenue for the government’s auction of a new spectrum–also good. and in return, they are requiring a series of commitments which will likely improve the result for consumers. i support that too. on the other hand, att’s history has been to capture as much profit as possible without regard for the consumers right to a good product or a competitive offering. while they have a constitutional right to operate that way, google should be applauded for their attempt to level the playig field and remove the potential for monopolistic outcome. and att’s response should be recognized for the good “spin” that monopoly money can buy.
“…please learn from past mistakes, ignore the lobbyists this time”
Ignore millions of dollars in personal and campaign funding… hmm… what is this, a democracy?!
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As far as I can tell, for whatever warts their history or plans for the 700MHz have, Google is the only advocate at this level of business that even pays lipservice to openness. I say they should be supported.
Keep in mind that no matter how open the rules wind up being, someone will figure out how to make it shitty. There’s no reason not to stave that off as long as possible.
The quote that makes Google’s argument crystal clear for me is this one:
“When you go to Best Buy to buy a TV, they don’t ask whether you have cable or satellite,” said Blair Levin, a former FCC official who is now an analyst at Stifel Nicolaus & Company. “When you buy a computer, they don’t ask what kind of Internet service you have, and the computer can run any application or service. That doesn’t exist in the wireless world. That’s where Google wants to go with this auction.”
I saw that that here: http://www.iht....1google-web.php
Maybe by the time my 2-year iPhone contract is over we’ll have some real choice!
Michael, Your last sentence proved to me that you understand the issues, “Ignore the lobbyists.” Unfortunately, it’s the lobbyists who help make so many decisions in favor of big business and against the common good. I know nothing about Google’s lobbying efforts but I can only assume that they have a strong lobby. Hopefully, in this case their lobby will beat that of more traditional companies. (By the way, Google is quickly becoming traditional. But I agree in this case we should suppor them.)
@Search*Engines WEB, “Has Google grown to a point in its ten year history that it has more influence with the FCC than Verizon or ATT?”
Do Verizon and AT&T get to exert more influence on the FCC because they’ve been around longer than Google? These guys are 1/2-witted, SCARED, quasi-monopolists, who are AFRAID that a new tech company with the brains, bank account and balls wants to play in their sandbox. Will they serve ads? great, I’ll take them. I bought a 2 year plan w/ AT&T and I still can’t get consistent service. I’ll take a bet that given Google’s business model (which is to provide a solid UI while making $….oh the horror), they’ll work a whole lot harder to ensure my service works, as long as it means serving those infernal ads. Serve em up, as long as I have 3-4 bars on my iPhone.
While I’m wary of Google’s increasing influence across most media channels, I’d love to see an open source spectrum become a reality, or even a Google Phone (monetized by Mobile adSense) – the current state of telecom-controlled closed mobile web would do better with competition.
I find it strangely ironic that people are policing the grammar police now. Anyway, I support Google on this one.
This board is full of middle aged lameduck lobbist and screwballs. They bored me a lot. This is way they grow wrinkles and gray hair.
Oh shut up. Let the young company survive this fight. Google has help many young people create dream jobs. Web 2.0, custom search, tiny widget VC. Google brought many startups: Jotspot, spreadsheet, etc. Now Yahoo, MSN, Ask, Ebay, Amazon dreams is to buy more startups.
What do Verizon & AT&T do all day?
Nothing… Collect… monthly expense and refuse to create jobs. Refuse to shut down telemarketing, hire young people, refuse built futuristic cities for young startups, and buy startups.
Google have alot of aging corporate enimies: Viacom attacks Google,
German & French president attacks Google.
Google is still #1. They help us create economy.
I’ve google “Grammar police”
Wikipedia actually show up the word “Grammar Nazi”.