Google offers $4.6B for spectrum if open access rules are met

Computerworld - Google Inc. CEO Eric Schmidt signaled today in a letter to the Federal Communications Commission that the company intends to bid a minimum of $4.6 billion for a portion of the 700-MHz spectrum band in an upcoming auction, assuming the FCC adopts rules that require open devices, applications, wholesale services and network access.

Google lawyers have been blogging frequently in recent days about the company's open access hopes for the auction, which could happen in January and yield an estimated $20 billion for the U.S. Treasury.

Major carriers, such as Verizon Communications Inc. and AT&T Inc., are assumed to be interested in making bids, but Google's entry would be unusual, given the company's history as a search technology innovator.

If Google won part of the spectrum, it would in essence become a carrier as well as a content and search provider and could conceivably serve as a wholesaler to Internet service providers and others.

While the FCC has not publicly announced its proposed rules for the auction, its five commissioners have been circulating draft rules. FCC Chairman Kevin Martin has indicated an interest in making cell phones and cellular applications open, or unlocked, meaning consumers could use a mobile phone with any carrier they choose. Martin has also told reporters there is no requirement in the draft rules that the winners of the auction create a wholesale business to sell spectrum to other companies, as supported by open access advocates. But Martin also said there is nothing preventing the future licensees from doing so.

Schmidt's letter to the FCC lists the four types of open access that Google has articulated in blogs and letters going back to July 9. The four areas would "ensure that, regardless of who wins the spectrum at auction, consumers' interests are served," Google said in a statement today. The four are open applications, open devices, open wholesale services and open network access.

Schmidt's letter states that "Google intends to commit a minimum of $4.6 billion to bidding in the upcoming auction" if the company's four conditions can be spelled out with "specific, enforceable and enduring rules."

The letter also states that "when Americans can use the software and handsets of their choice, over open and competitive networks, they win."

Google defined its four conditions as follows: Open applications means that "consumers should be able to download and utilize any software applications, content or services they desire." Open devices means "consumers should be able to utilize a handheld communications device with whatever wireless network they prefer."

Open wholesales services means "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." Finally, open networks means "third parties (like Internet service providers) should be able to interconnect at any technical feasible point in a 700-MHz licensee's wireless network."

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