The hotly anticipated U.S. federal auction of mobile phone airwaves begins today, and some are speculating that Google – who famously announced their intentions to bid – may spend less than investors have anticipated and let the telecoms win after all. Why after all the hoopla would Google just let them at it without putting up a worthy bid?
Gerald Granovsky, a Moody’s Investors Service analyst, speculates that Google, the only newcomer remaining with enough dough to actually purchase the largest block of spectrum, may allow them to win as they’ve already been successful in pushing to open networks to more phones. It is also now possible that the spectrum auction won’t raise the $20 billion estimated by analysts last year due to a lack of competition.
Christopher Larsen, an analyst at Credit Suisse, said in a memo on Wednesday that he expects the auction to raise $15 billion, and that AT&T and Verizon (the #1 and #2 mobile phone carriers in the U.S.) will buy up to two-thirds of the spectrum up for grabs.
While it would be nice if Google did bid and secure some of the most coveted part of the spectrum up for grabs – that which is perfect for sending downloads and videos to mobile handsets – Google has maintained for some time now that they are not interested in becoming a mobile service provider. So if they did actually purchase it, what would they then use it for? It actually makes sense at this point that Google got into the bidding, simply to get the big boys to agree to some of their ideas with regards to network openness.
Even with these predictions flying around, however, Google could surprise us all by making a worthy bid and securing a large chunk of the valuable spectrum.
The coveted C block for which Google will be placing its bid has a little caveat. If the FCC is unable to raise the $ 4.6 billion ( highest bid), then it will be re-auctioning the spectrum with out the open access clause. Does that not make it better for AT & T to rather let Google go ahead if it does want to null the open access requirement.
These few articles are wild speculation on Google’s involvement. The reason Google is getting involved is because they need to expand their market and are unable to reach a significant number of mobile users with restrictive hardware, high price points and low bandwidth provided by current mobile business models today.
If they get the spectrum I am sure they will arrange more of an open market for smaller ISP’s to use it, similar to the way they have taken other technologies they have developed and pushed them out to the community.
On the other hand, if you were actually analyzing and trying to make a business case for one of the incumbents to buy, you would discover that they already are struggling to hold on to and increase market share for their current mobile subscribers, and with short of a hundred million new customers falling from the sky, they can’t afford to purchase spectrum and profit from it. It would be more of a defensive manueuver to prevent someone from entering their market and destroying their current margins.