Google to Bid for Wireless Spectrum

Google is readying itself to be part of the auction for the wireless spectrum in the U.S. in January. The auction is for the right to use the spectrum, and would be conducted by U.S. Federal Communications Commission on 24 January, 2008. According to the FCC, the last date for interested parties to declare they intend to bid is December 3.

The wireless spectrum being auctioned is called the 700MHz band, and ranges between the frequencies 698MHz and 806MHz. Analog TV broadcasts currently air on this frequency, and would be free for use by other networks by 2009.

Google is planning to make the bid alone, something that analysts feel is not the right way to go. Google had earlier said, in July, that it was looking to commit at least $4.6 billion for a license to use the spectrum in the event the FCC laid down conditions for using the spectrum.

The conditions Google was looking for included allowing users to select the network and applications they wanted to use with their phones. Other conditions included service providers being given the freedom to connect to the networks that the users chose and also for the owners of the chosen networks to offer the service providers the use of these networks at reasonable rates.

The problem for Google would not be finance. It has the ability to set aside $4.6 billion, the amount it has earmarked for bidding for spectrum, considering the cash and cash equivalents the company had added up to a total of $13.1 billion.

What analysts are skeptical about is the fact that this is not Google’s core competency. Its core competency is online advertising. Jan Dawson, a vice president at Ovum Ltd., a market analysis firm voiced this when he said, “Anything other than search at the minute seems like a move in the wrong direction.”

Senior analyst at Current Analysis Bill Ho said the need for a partner would arise when it came to core issues involved in the creation and running of a network, issues related to operations and maintenance.

While some analysts are suggesting Google could look to Sprint as a partner, considering the two are already partnering in the area of WiMax services, other analysts are suggesting the possibility of an experienced operator but with no current market presence in the United States. The possibilities include NTT DoCoMo from Japan or Orange, a France Tilicom subsidiary.

A Google representative said the company’s bid was not yet complete, and the company was still preparing it. According to analysts, a good option for Google would be to partner with a carrier to help create the network first, so it can use it.

There is speculation as to why Google wants to enter this arena in the first place. Google may not be looking at this as a money making venture. It could simply be thinking of using this platform to ensure more mobile phone owners had access to its applications.

This is definitely not Google’s first step in this direction. The company is already offering its web applications on the iPhone from the Apple stable. Another step is the release of its Open Handset Alliance.