The Background
Traditionally, cell phones use four frequencies: 800 MHz, 900 MHz, 1800 MHz and 1900 MHz. The 700 MHz spectrum range was being used by TV stations to broadcast analog channels 52 through 69.
Now that analog TV is going bye bye (February 17th, 2009 is the last day of full power analog television broadcasting. Beyond that date, it’s going to be all digital. If this is news to you, check out http://www.dtv.gov/consumercorner.html.), Federal Communications Commission (FCC) has decided to open up that frequency range for other purposes.
An auction was started on January 24th, 2008 for this frequency range.
Google’s Involvement
Google got involved in the auction process at an early stage. They said that they would bid in the auction provided FCC opened up the spectrum in the following way ( http://www.google.com/intl/en/press/pressrel/20070720_wireless.html):
- 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.
Google committed to bid for the wireless spectrum for an amount of $4.6 Billion if FCC opened up the spectrum in the above mentioned way.
The Effect
The effect of Google’s offer was instantaneous and far reaching.
Firstly, FCC agreed to Google’s proposal to a large extent. Specifically they embraced a plan that “breaks up the 700 megahertz band into five blocks of spectrum and requires the owners of a large, 22-MHz upper C Block to provide a platform that is more open to devices and applications.” (http://www.pcmag.com/article2/0,2704,2164661,00.asp)
Although their conditions were not fully met, Google did not rule out bidding for the wireless spectrum.
Enter Verizon. Traditionally used to having closed networks and artificially choking external applications and devices, Verizon saw this as a potential slap in the face to their business practice, and filed a lawsuit seeking to have the rules dismissed on the grounds that the open access requirement “violates the US Constitution, violates the Administrative Procedures Act … and is arbitrary, capricious, unsupported by the substantial evidence and otherwise contrary to law.” ( http://www.rcrnews.com/apps/pbcs.dll/article?AID=/20070913/FREE/70913010/1005/rss01 )
After trying to have a “speedy resolution”, and losing the appeal, Verizon dropped the lawsuit. However, Cellular Telecommunications & Internet Association (CTIA) picked up where Verizon left, and filed another lawsuit for the same reason.
The Auction
Even with these protests, the auction was held. The “open” Block C had a reserve price of 4.6 Billion, thanks to Google. 5 out of 6 blocks (Blocks A, B C, E and F) were sold off at an aggregate reserve price of around $10 Billion, the Block D being set aside for public safety network due to some complications regarding reserve price. Anonymous bids were placed, and when the auction was over, the winners were not known immediately. It was found out that the total amount FCC received was more than $ 19 Billiion.
The Aftermath
Speculations were ripe about who had won the coveted Block C “open” range. Everybody thought it would be Google, since it was obvious Google had the interest and the greens to back it up. The other competitors included Verizon, AT&T, Cox Cable, Dish Network, Leap Wireless, Frontline Wireless etc. But some were already beginning to suspect Google’s motive. It was being said that Google was not interested in buying the frequency range, it’s interests were much deeper.
When the results were known, mostly declared by the enthusiastic winners, it was found that Verizon was the winner of the Block C, AT&T had won a big chunk of regional licenses. There were other winners, but the name mysteriously missing from the winner’s list was Google.
Before we get into why Google did not win, let’s look at the effects of the auction on the open spectrum.
Verizon has pledged to offer its network for software devices, software and applications not provided by the company. This means:
- Any device that can work in the frequency will work with the provider. No more locked devices in that frequency. Device makers rejoice.
- Any application can take advantage of the available bandwidth in the open frequency, provided the device is capable of using that frequency. Developers rejoice.
- Any application can be used in the frequency, does not need to be provided by any particular provider. Users rejoice.
- This open band will facilitate the migration to 4G – meaning higher bandwidth for everybody.
- Companies (like Verizon) will see a flood of network usage, potentially charging higher fees for better quality service, and an option to put their finger in lot more pies than is possible at the moment.
Although there is a small incentive for the providers, overall it seems that it’s a much bigger win for the consumers. So why did the providers jumped into the bandwagon to purchase this open spectrum?
The Genius of Google
This is where Google comes in. It turns out Google never really wanted to win the wireless spectrum. All they wanted to do was to create an awareness of how important this spectrum is, and to make sure at least one block of the spectrum becomes open. They got it. Everybody fell for their hook, line and sinker.
Google got what they wanted without spending a single dollar!
Once people realized how they were played by Google, many of them were not happy. Republican Congressmen Fred Upton, Cliff Stearns and John Shimkus have expressed their displeasure on how Google toyed with the government and “gamed the system”. Verizon, of course, has to follow the rules now and open up the bandwidth as and when they receive their prize (which will be February 2009). They can not but sport a happy face. But one can imagine what is going through their mind.
So what does Google want? They have long been providing mobile application and services, and now their mobile OS Android (which, by the way, is probably the only competition to OS X in iPhone at the moment. More at http://code.google.com/android/) can use the open spectrum. Great new applications are coming up for Android (including, but not limited to, the Enkin project, http://www.enkin.net/) and having an open broadband wireless connection would be immensely helpful to them.
What would have happened if Google had actually won the spectrum? I am sure they would have used it in some unforeseen way, but that point is moot now. It is clear winning the bid was never Google’s first choice.
The game is over. We have a winner. Now all we need to do is sit back and enjoy the after effects.