Google on Friday formally announced that it intends to bid at least $4.6bn in the upcoming 700MHz spectrum auction.
The company had previously asked federal regulators for open-access conditions for part of the airwaves, so that any device or application could be used on them. Google had also wanted operators other than the license holder to be able to use this part of the spectrum.
The US Federal Communications Commission agreed to some of those conditions, but not all and there was some uncertainty over whether Google would indeed bid on the spectrum.
The search engine removed all doubt on Friday, just in time for today’s deadline for bidding applications.
Jan Dawson, VP of US enterprise practice at Ovum, said Google had already succeeded in getting the terms of the auction changed, specifically open-access rules for the ‘C’ Block of spectrum. She noted this was likely a trigger for Verizon’s announcement earlier last week that it plans to open up its airwaves to other devices and applications next year.
Precisely what Google plans to do with the spectrum, however, remains speculative.
The obvious thing to do with spectrum is clearly to become a mobile network operator, but that seems a bizarre move for Google to make at this time, Dawson said.
Google might use its investment in femtocell maker Ubiquisys to build a non-traditional network using home base stations rather than traditional cellular infrastructure, but that would only provide partial coverage and would still have many of the same downsides as running a traditional network, Dawson said.
Of course, Google is mostly concerned with ensuring there are as few barriers as possible to the adoption of Google products and services on mobile devices, Dawson noted. Its Android initiative is an attempt to reduce barriers in the mobile operating system, and a bid for spectrum may be seen as an attempt to reduce barriers to the adoption of Android-based (and other Google-friendly) devices on wireless networks, Dawson said.
After all, Google’s core business model is built on selling advertising alongside content, which means far higher margins than any US wireless operator has been able to achieve, even with massive scale. As Dawson pointed out, Google would be starting from scratch with virtually no network infrastructure, no experience – at least organically – in running a wireless network, and no scale.
The reserve price for the C Block spectrum is $4.6bn.