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Google Plans to Bid 4.6 Billion on 700MHz Band

Posted by Zonk on from the dude-you've-been-googed dept.

NickCatal writes "The Wall Street Journal is reporting that Google plans to bid $4.6 Billion on the 700 MHz radio spectrum being auctioned off by the FCC. What is most interesting is that they are not planning on partnering with other companies to raise the cash, they are going to spend their own cash and possibly borrow some. With partners such as Sprint Nextel and T-Mobile in their 'Open Handset Alliance' is this a sign that they are willing to directly compete with the people they courted to join?"

6 of 148 comments (clear)

  1. Re:why? by Ducu2002 · · Score: 5, Informative

    4.6 billion is the minimum price the FCC is willing to actually sell for, as in if nobody bids as much as 4.6 the FCC won't actually sell. So by saying to the FCC we'll bid 4.6 they assure the FCC they'll get the price they wanted. In exchange for this assurance Google got 2 out of 4 condition for free access to the frequency.

  2. Re:f me thats a lot of money by Roofus · · Score: 4, Informative

    Googles Market Cap is $198 Billion. I think they can find the capital if need be.

  3. Re:f me thats a lot of money by siliconwafer · · Score: 4, Informative

    At the close of their most recent quarter Google has more than $13B in cash in the bank. They also have no debt to speak of.

    With a market capitalization of nearly $200B, no debt, and a 22% return on equity, Google should have absolutely no problem raising cash if necessary. I suspect they will tap into their cash reserves rather than debt financing or raising capital by diluting existing shareholder equity.

    The numbers are here:
    http://finance.yahoo.com/q/ks?s=GOOG

  4. It's part of the government by dewarrn1 · · Score: 4, Informative
    From http://www.fcc.gov/aboutus.html

    The Federal Communications Commission (FCC) is an independent United States government agency, directly responsible to Congress. The FCC was established by the Communications Act of 1934 and is charged with regulating interstate and international communications by radio, television, wire, satellite and cable. The FCC's jurisdiction covers the 50 states, the District of Columbia, and U.S. possessions.
    Proceeds from auctions appear to be paid to the Treasury, although I admit I didn't wade through the entire act and it has been amended piecemeal since enactment http://www.fcc.gov/Reports/1934new.pdf (PDF warning):

    (C) DEPOSIT AND USE OF AUCTION ESCROW ACCOUNTS.-- Any deposits the Commission may require for the qualification of any person to bid in a system of competitive bidding pursuant to this subsection shall be deposited in an interest bearing account at a financial institution designated for purposes of this subsection by the Commission (after consultation with the Secretary of the Treasury). Within 45 days following the conclusion of the competitive bidding-- (i) the deposits of successful bidders shall be paid to the Treasury; (ii) the deposits of unsuccessful bidders shall be returned to such bidders; and (iii) the interest accrued to the account shall be transferred to the Telecommunications Development Fund established pursuant to section 714 of this Act.
  5. Re:f me thats a lot of money by Frank+Battaglia · · Score: 3, Informative

    Not necessarily. The purchaser will most likely utilize the spectrum in the way which makes the most profit. For Google's business model, that may entail unencumbered access to get as large a user base as possible for directed advertising.

  6. Re:f me thats a lot of money by StringBlade · · Score: 3, Informative

    There are already network transparency provisions on this frequency which makes it particularly appealing for consumers to buy devices designed to run on this spectrum. Last year Google petitioned the FCC to include four conditions of sale for this spectrum including network transparency for devices (meaning you can't be locked in like you are with Sprint/Verizon/AT&T/T-Mobile when you buy a phone) and something about requiring the high bidder to provide access to competitors for a reasonable price.

    The FCC shot down two of the four suggestions, but the network transparency provisions stayed in. I'm holding off on buying a new phone for a while because if I can get a device (from any carrier) on this frequency I know I'm not locked in by the technology according to the conditions of sale.

    Verizon and Sprint are fighting this condition in a lawsuit against the FCC.

    --
    ...and that's the way the cookie crumbles.