The big news this morning is that Google has announced that they will take part in the bidding process for the 700 mHz wireless spectrum in the United States. In order to bid, they must file an application with the FCC by the deadline, which is this Monday. Google is interested in the C-block of the spectrum, which currently carries a reserve price of 4.6 billion.
As part of the auction, the FCC has made "open access provisions" part of the C-block of the spectrum, mandating that the auction winner "shall not deny, limit, or restrict the ability of their customers to use the devices and applications of their choice..." and that "no licensee may disable features on handsets it provides to customers....", all of which means that someone like Verizon, who is notorious for locking down and deactivating certain features of phones on their network isn't going to bid on the spectrum. If the reserve price isn't met, then the spectrum goes up for auction again, this time without the open access provisions. With Google bidding, at the very least the spectrum will make the reserve price, and open access provisions will be in effect.
Chairman Eric Schmidt has stated in a press release:
"We believe it's important to put our money where our principles are. Consumers deserve more competition and innovation than they have in today's wireless world. No matter which bidder ultimately prevails, the real winners of this auction are American consumers who likely will see more choices than ever before in how they access the Internet."
Looking at the big picture, if Google wins the license for the spectrum, Google could become a provider of mobile phone and internet services, and it could also partner with or lease the spectrum to those who are interested. With their recently created Open Handset Alliance, they will soon have phones which will run on their Mobile Platform. Google, doesn't intend on becoming a carrier like Verizon or Sprint, and I believe if they were to become a carrier, their services, much like their software products, would be available for free, and likely supported by ads.
Google has thus far, done an excellent job of destroying paid service models -- before Gmail, users of MSN and Yahoo! Mail happily forked over cash for more mail storage, and I find myself working more on Google Documents than I do within Microsoft Office. I think what will happen with OHA and Google will be a variety of handsets that will provide the user control of their phone, in ways that previously was limited to those with more technical expertise. For instance, cellphone content are still an item that consumers spend millions on per year -- what Google could have is a pipeline to deliver that content -- even if Google does not win the bid, they will have at least met the reserve price to open up the spectrum for the open access provisions to go into effect.
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