Out of Control Policy Blog

Auction Action

Google declared today it will commit to bidding a minimum of $4.6 billion for a chunk of the 700 MHz spectrum the FCC is getting set to auction – that is, if the FCC sets the terms of the auction in Google's favor.

For the past week, the rhetoric's been heating up over the prospect of the FCC setting a "neutrality" rule for a portion of the spectrum. Google, along with Frontline Wireless and Skype, has been pressing regulators to impose an "open device/open applications" rule on the winner.

Such a rule would prevent a service provider from locking phones and other devices to its network, and from controlling the use of software and applications by requiring certification. The introduction of the Apple iPhone, which thus far works only with AT&T's wireless network, has become something of a poster child for the neutrality camp.

Throwing out a huge dollar figure might yet be a bold move to leverage the voices in favor of Internet regulation. Still Google risks irking regulators by suggesting that they can be "bought," even when the beneficiary in this case is the U.S. Treasury.

Already CTIA, the wireless trade group, is stoking this perception in its statement.

"If Google is willing to commit almost $5 billion dollars for spectrum that it wants encumbered with various requirements, then let it win that spectrum in a competitive auction and choose that business model. Google and its allies, with their collective market capitalization approaching half a trillion dollars, don't need a government handout at taxpayers' expense. The competitive wireless industry welcomes all new entrants, but no company should be able to buy a custom-fit government regulation that suits their particular business plan."

The size of the dollar figure also attracts the question why Google wants this spectrum so badly. That invites stories such as this Dow Jones article that frames the regulatory dispute in the context of Google's self-interest.

These "negotiations in the press" are likely to continue until FCC Chairman Kevin Martin formally says what he thinks. Martin seems to have been communicating his position to a number of the companies that plan to participate, stoking rumors and think tank gossip as to what which way he's going to fall. Last week, reports said he was leaning toward neutrality. This week, it doesn't seem so certain. Stand by for more rhetoric.


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