Google Might Bid On Spectrum, But It Won’t Build Its Own Network

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Google’s CEO says that the company will “probably” bid on 700 MHz spectrum licenses in the auction for them early next year in the US. For some time, Google’s been making a little noise (and letting the speculation run wild) about becoming a mobile/wireless provider, and its involvement in some muni Wi-Fi projects has helped fuel the hype. But it’s highly unlikely that Google will ever build, run and maintain its own mobile network.

Google was agitator-in-chief in trying to get the FCC, the US telecom regulator, to attach open-access rules to the 700 MHz spectrum. It wanted license winners to be forced to allow any compatible device to attach to their network, and for network operators to be prohibited from blocking access to any software, service or content. The top priority for Google, though, was getting a stipulation that 700 MHz license holders would be required to sell wholesale access to their networks. This makes it pretty clear that Google’s interest here was as a wholesale buyer of network access (like an MVNO, essentially) — not as a potential operator. After all, if it wanted to operate a network using these principles, it could acquire the licenses at auction, build a network and run it however it saw fit.

Google made a relatively empty promise to bid $4.6 billion in the auction if the FCC adopted the principles; the FCC responded by adopting only the two most meaningless open-access stipulations in its rules, but crucially, passing on the wholesale stipulation. From Google’s perspective, this significantly decreased the likelihood that it would enjoy a competitive market from which to buy wholesale access to redistribute, in turn resulting in higher costs for whatever it’s got planned to do with all that mobile network access.

So the next logical move would be for Google to go after some licenses. Should it win some — and there’s no guarantee it will — it will have a valuable currency to spend with actual network operators. Google could lease the licenses to somebody to build and operate the physical network, and extract the best terms possible from an array of competing suppliers. Whoever leased the license would power the Google virtual network, and probably be free to sell excess capacity to other service providers.

The end result of a competitive market supplying Google with network access would essentially be the same, but buying the licenses for several billion dollars is obviously far less preferable to getting the FCC to foster that market for free. Google’s posturing makes it pretty clear that it will, in some form, supply mobile broadband access. This may entail it acquiring spectrum licenses, but it’s not likely we’ll see Google physically build and operate any sort of mobile network of its own.

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