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Reason Foundation

Poor Little Google

Steven Titch
July 17, 2007, 12:44pm

Randolph May at the Free State Foundation takes Google and Frontline to task for their blatant rent-seeking efforts to rig the 700-MHz spectrum auction by demanding that the FCC mandate winners adhere to wireless network neutrality. Worse, Google is pleading poverty! Seems it claims not to have the "resources" to be able bid head-to-head with the wireless service providers. Apparently, the company's found a sympathetic ear from FCC Commissioner Jonathan Adelstein, who says he "takes very seriously" Google's assertion that it just won't be able to participate in the auction unless the rules are changed to, in effect, devalue the spectrum for the incumbents while increasing its value for Google, which wants to use a different business model. As May points out, Google's "poor little us" approach is especially galling.
"I remain confused. Google has a market cap today of $173 billion dollars. What exactly are the economic barriers that prevent a company with a $173 billion market cap from participating in a clean auction? Obviously, an existing provider has certain advantages over a new entrant: a customer base, rights-of-way, a marketing team, a back office operation, and so forth. But for a company that tells the FCC in comments that its daunting "self-defined mission" is to "organize all of the world's information," is it really too much to expect that Google can figure out how to address what it calls operational barriers? If necessary, some of those presently assigned to organizing the world's information can be temporarily detailed to getting a new service provider, Googlecom, with a great brand name and a loyal customer following, up and running. "I am not surprised that Commissioner Adelstein is sympathetic to jerry-rigging the auction rules by imposing net neutrality/open access/unbundling rules to give Google, Frontline, and others say they need to participate and win the auction. Frankly, I don't expect the Bush Administration-appointed FCC Chairman, Kevin Martin, or the two Republican commissioners, who ought to be free market-oriented, to succumb to the managed competition temptation."
Unfortunately Martin, who gives cursory interest to aspects of telecom policy that don't involve increasing media censorship, seems to have fallen for the Google/Frontline poverty plea hook, line and sinker. As a bonus, see Holman Jenkins' column on Google's rent-seeking in today's Wall Street Journal (subscription required).


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