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Why Google Doesn't Need To Win the Bid To Win In January
explosivejared writes "TheStreet discusses Google's possible strategy options in the bid for the 700 mhz spectrum. The end goal of getting the government to put an open access stipulation on the spectrum, Google's end goal, is almost a given — in the author's opinion. At this point, he says, Google hardly even needs to win to 'win.' From the article: 'Rather than actually winning the auction, Google's participation is likely intended to secure what it sees as the real reward: ensuring that whoever ends up owning the spectrum allows the open access of applications and devices. Indeed, as long as this goal is met, it's hard to see why Google would want to take on the costly task of building and running its own network. But given how much is at stake when it comes to the mobile market, Google's vigilance is shrewd, even if it never planned to own the spectrum.'"
A lot of analysts are certain Google's not bidding to win, just to make sure they hit the reserve price and ensure openness provisions kick in. Everybody's sure Google doesn't want to be a network operator.
And they may well be right on that count -- but who says they don't want to be a network *architect*? Google has, as TFA points out, $13b in cash. They could easily afford the final sticker price on the licenses, then lease the spectrum to players who have to play on *precisely* their terms (which probably entails not just open access, but a dumb pipe -- just providing bandwidth, instead of mobile phone service.) That pushes the buildout cost away from GOOG, but still might allow for a hellacious ROI.
I can't take credit for these insights/speculations myself -- check out Harold Feld's take and a great deal more detail.
I believe net neutrality may be a key factor in Google's willingness to become a network provider. If the traditional telcos start putzing with the packets, placing artificial barriers on the flow of data, then the only way to break the barriers is to either enact legislation, or by-pass the networks having the barriers.
If memory serves me, wasn't Google buying up gobs and gobs of dark fiber networks? If this is the case, then couldn't they light the fiber, using it as a backbone, and use the wireless spectrum for the endpoints - creating a massive Googlenet?
Now, add the much talked about gPhone and Google's demonstrated desire to offer free WiFi and you have a very enticing way to attract customers - which is really what Google wants...more eyes on more advertisements.
Either way, it is a win-win-win situation for Google.