VZW’s open access plans fail to dissuade Google’s auction aims

THE $4.6 BILLION QUESTION has been answered. Google Inc. is in. The Internet search engine giant said it will participate-alone-in the 700 MHz auction set to begin Jan. 24.
“We believe it’s important to put our money where our principles are,” said Eric Schmidt, chairman and CEO of Google. “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.”
Google, based in Mountain View, Calif., said it will file a short-form application with the Federal Communications Commission on Dec. 3, the deadline for the filing. Prospective bidders for the 1,099 wireless licenses-which could generate up to $15 billion for the U.S. Treasury-must then submit upfront payments by Dec. 28.
Google did not specify what exactly it would bid on, but indicated it was interested in the 22 megahertz open-access C Block. That block has a $4.6 billion minimum bid requirement.
Verizon Wireless’ announcement that it would allow third-party devices and applications on its mobile-phone network by the end of next year sparked speculation on whether the move might dissuade Google from bidding in the auction-and thus remove it as a competitor to Verizon Wireless in the spectrum sweepstakes.
As a general matter, while it will become clearer in coming weeks who the likely 700 MHz bidders will be, round-by-round competition among bidders will be difficult to track as the FCC’s anonymous bidding method will reveal only the dollar-figure of leading bids, but not the identities of bidders themselves. The FCC will not lift the semi-black out on the 700 MHz action until after bidding ceases, perhaps in March.
“This summer, more than 250,000 Americans told the FCC to open a valuable slice of the public airwaves to all devices and applications. Incumbent phone companies claimed that open access conditions would undercut competition-but the opposite is true. Open networks mean more competition,” said Ben Scott, policy director of Free Press. “Google’s intent to bid in the 700 MHz auction and Verizon’s sudden support for open networks suggest that we may finally see the competitive wireless marketplace that consumers demand.”
Whether the vision of open networks will actually be fully realized is another matter.
While Verizon Wireless’s open platform overture drew plaudits from various quarters-including Capitol Hill and the Federal Communications Commission-some reactions were laced with skepticism. It also remains to be seen whether Google can make a go of it in a competitive and sophisticated wireless market in which it has no experience. Thus, open access is still an open question in the wireless industry.
“This is surely a step in the right direction, but its shortcomings underscore the need for regulations to guarantee Americans the same rights on wireless networks that they have on landlines,” said Harold Feld, senior VP of the Media Access Project. “Verizon’s plan still doesn’t guarantee access for all devices, and it is uncertain how much Verizon may charge customers for the right to use their own equipment. Without the certainty that comes from making open platforms a right, rather than a privilege at the mercy of a provider’s business plan, innovation and choice in the wireless world will continue to lag behind Europe and Asia.”
Public Knowledge President Gigi Sohn said the organization is cautiously optimistic about Verizon Wireless’ plan, which is supposed to kick in around the time the presidential election is decided. The outcome could mean more wireless regulation if Democrats-who control Congress and favor open networks-pick up the White House.
“The Verizon announcement . is very limited, said Sohn. “If other carriers don’t follow the same model, then consumers will still find their phones tied to a specific technology or wireless company. Until they do, an iPhone will still be useless on any network but AT&T’s. In order for an open network to become a reality, all carriers will have to participate.” Sohn added: “Even with the announcement …, if Verizon continues to subsidize cellphones, then the adoption of the open model will be minimal absent a rapid decline in cellphone prices. We need to know whether the rates for Verizon service plans will vary for those with subsidized phones and for those customers with a phone bought elsewhere. We also note that Verizon alone decides what phones and applications will be acceptable to its network. It would be preferable to have a neutral third party either making the decision on acceptability for Verizon, or conducting evaluations which would be accepted by Verizon.”
Frontline Wireless L.L.C. said the Verizon Wireless announcement reflects the emerging trend toward open networks, which the Silicon Valley-backed startup-which plans to bid in the 700 MHz auction-has been aggressively pushing. But the company said the devil is in the details and implementation. “It remains to be seen whether this is really the road to Damascus or a modest concession,” said Janice Obuchowski, chairman of Frontline.
Frontline appears focused on the national 700 MHz license that’s up for grabs. The winner, which would have to put in a minimum $3.1 billion bid, will build a commercial-public safety broadband network with input from first responders.
After the Public Safety Spectrum Trust Corp.-which will partner with the D-Block auction winner-released its revised bidder information document Friday, Frontline’s Obuchowski commented: “These requirements reflect weeks of serious discussions between the public safety community and potential bidders. We are in the best position-most effectively and promptly-to construct and operate a state-of-the-art 4G network that meets public safety’s vital requirements.”