Thursday, April 3, 2008

Cone of silence (finally) lifts on the spectrum auction

For three weeks at the end of January and early February, a small team of us holed up in double super secret "war rooms" in Mountain View, CA and Washington, D.C. to bid on Google's behalf in the FCC spectrum auction. Bidding took place electronically, and literally billions of dollars were at stake with every mouse click. And because of the FCC's strict anti-collusion rules, we couldn't tell a soul what was going on behind closed doors.

But now that the FCC's rules have lifted, we can. As you probably know by now, Google didn't pick up any spectrum licenses in the auction. Nonetheless, partly as a result of our bidding, consumers soon should have new freedom to get the most out of their mobile phones and other wireless devices.

Google's top priority heading into the auction was to make sure that bidding on the so-called "C Block" reached the $4.6 billion reserve price that would trigger the important "open applications" and "open handsets" license conditions. We were also prepared to gain the nationwide C Block licenses at a price somewhat higher than the reserve price; in fact, for many days during the early course of the auction, we were the high bidder. But it was clear, then and now, that Verizon Wireless ultimately was motivated to bid higher (and had far more financial incentive to gain the licenses).

You may remember that as the FCC was setting rules for the auction last summer, we urged the Commission to adopt four openness conditions. Further, we vowed to bid at least $4.6 billion in the auction if the Commission adopted all four rules. Even though the FCC ultimately agreed to only two of the conditions, which nullified our original pledge, we still believed it was important to demonstrate through action our commitment to a more open wireless world.

We're glad that we did. Based on the way that the bidding played out, our participation in the auction helped ensure that the C Block met the reserve price. In fact, in ten of the bidding rounds we actually raised our own bid -- even though no one was bidding against us -- to ensure aggressive bidding on the C Block. In turn, that helped increase the revenues raised for the U.S. Treasury, while making sure that the openness conditions would be applied to the ultimate licensee.

The end of the auction certainly doesn't mark the end of our efforts toward greater wireless choice and innovation. We will weigh in at the FCC as it sets implementation rules for the C Block, and determines how to move forward with a D Block re-auction. Android is already off to a successful start, and we are likely to see handsets later this year based on the Android platform. We will continue advocating for the FCC to open up the vacant "white spaces" in the TV spectrum band for mobile broadband uses. And as more policymakers and regulators around the world evaluate their own spectrum policies, we'll continue pushing to help make the wireless world look much more like the open platform of the Internet.

What did you think about how the auction turned out?


Darnell Clayton said...

As a former Verizon customer (who now has an iPhone) I was saddened by the loss, but hopefully it will mean that Verizon will finally embrace openness.

AT&T, for all of its problems has at least gone that far.

Bob said...

Since it seems that you were at least willing to acquire the spectrum, what would the intentions have been? To actually build a wireless network, or to simply resell the spectrum?

Alan said...

I, for one, welcome our new Verizon overlords.

Bob said...

I will be seriously considering the first Android phone that can be used on the Verizon network.

olternaut said...

Well, I was hoping that Google was going to actually win the auction and work with several hardware vendors to deploy some sort of nationwide network. Then to make available to the consumer a very low cost way to access the internet over wireless broadband. And that we would be able to use whatever handset we want. Perhaps even free internet paid with Google ads on the handset.
But I guess not.
At the very least Google I hope you have come up with some way to fund startups who have ideas on creating brand new never thought of designs for handsets/mobile devices. Devices that should be at least on par but frankly way more advanced than what apple is doing. Apple is great but they are control freaks.

Highly advanced handsets/devices better than Apple's with better software on an open network allowing the customer to do what he wants....stuff that has never been done the dream. At least reach for that dream Google!

theregoesdave said...

If Google does a good job of implementing Skype in Android, users can avoid paying for monthly minutes. Google might not get the cake, but we all get to eat it!

Steven said...

I personally love what happened. I am a Verizon Wireless hater, and will be until I die... and am happy to see that they spent way more money than what they might have had to had Google not been involved! Go Google!

Eric said...

I had the same wild dreams that olternaut had. I haven't read anything in the openness provisions that prevents Verizon from charging for said access. What will Google do if Verizon makes it as difficult as possible to use these provisions?

Benjamin said...
This comment has been removed by the author.
Benjamin said...

I think all this celebration is very premature. Telecoms are re-defining the words they use like there's no tomorrow. "Unlimited internet" referring to monthly connection time and not quantity transferred; "Unlimited access" not being unlimited, but with degraded performance with particular protocols, monthly caps, and blocked ports; and let's not forget how Comcast rationalized their computer-impersonating when it came to p2p traffic. Considering all they can get away with manipulating the word "Unlimited", what exactly is there to cheer about when they agree to use the word "Open"?

The two sentences the FCC agreed to incorporate are fabulously vague and open to all kinds of interpretation. Until your *intended* interpretation is set out in legalese in the winner's terms-of-use contracts presented to consumers, there is no reason to believe that the implementation will even *begin* to resemble the intended interpretation

So, aside from getting the winner of the spectrum to say "Uh-huh" to two vague statements, I don't see what else has been accomplished that necessitates all these self-congratulations.

Bob said...

Well, all of the celebration is in order so that everyone can celebrate what they EXPECT Verizon and AT&T to do. If everyone is celebrating, and Verizon and AT&T doesn't give what everyone is expecting, there will be great disappointment and possible revolt, which can only be a good thing for the consumers.

By constantly being pessimistic and regularly expecting and anticipating bad behavior from Verizon and AT&T, they are much more easily able to get away with it without much fanfare.

So, let us continue to celebrate and remain optimistic about Verizon and AT&T for changing their ways for the better. If they let us down, let's smite them.

Michael said...

The internet is only as useful as the browser and network that it runs on...and then it becomes a function of whether or not the internet is organized. Google, obviously, has this part covered.

But in order to achieve that end, Google wants phones to be faster and more useful. Is that so much to ask? Since nobody is willing to do this...they took matters into their own hands. Bidding up spectrum so operators (the people that should be making mobile networks faster) have to commit to a more useful netowrk.

With respect to Android -- it is purely to light a fire under phone developers -- developers who have made absolutley miserable devices for web browsing. Cellphones have been around for almost two decades and yet nobody can browse the mobile internet.

Arguably, the iPhone is the first phone that you can actually use the internet similar to they way you use the internet on a desktop.

That's the type of technology Google seems to want to proliferate. And, using terrestrial internet as precedence, the mobile internet could be just as useful and important, if only the proper investments in networks and browsers are made.

Basil said...

If your work does nothing more than allow for a viable alternative to big telecom's protectionist policies about mobile data, then you will have done a serious good deed for the country.

I only hope you do this type of thing in other countries *cough*canada*cough*

Ryan said...

I am happy to see the bidding went to VZW. And I am also happy to see that Google played the economy card and raised the reserve. In the end I am hoping that this turns out to be a partnership between Google's Android and VZW's open access. VZW will then clean house and actually have a solid competitor for the iPhone, iPhone2 and anything in the near future. Having handsets that advertise themselves is the key to growing business in this industry and we have all seen the free advertising AT&T and Apple have enjoyed since the iPhone's release. Can any of the suits at Google comment on a possible partnership?

Ryan said...

Additionally, Verizon's competitive bidding and ultimate win of the spectrum makes many people move toward the buzz created by this and research by these individuals will continue. This will bend in VZW and Google's favor as they were the major contenders in this auction. So what does this mean. 4+ billion dollars well spent to have developers create devices for VZW and will charge a fraction of the price that major manufacturers will charge to create exclusive devices. I don't know why people are thinking that Google's Android will touch AT&T seeing that AT&T is sticking with their ultra-sheek cafe style handsets and will be reinventing the wheel over and over until it gets way too long in the tooth. VZW's CEO basically said at CTIA that VZW and AT&T are the big players in the industry and are not enemies, but competitors. Competition will keep the new handsets coming and keep the industry evolving. So today I won't say go VZW...I say Go Wireless Industry and thank you for your services.

Mobile Boffin said...

Even though Google didn't ultimately win any licenses, we should still view this as a step (but only a step) in the right direction. We all want to share the optimism that Verizon will be sincere in its move to openess. I am sure the timing of their openess initiative announcement was not missed by many.

That said, there is good reason to continue to be wary (and more importantly to continue to demand true openess). It is not necessarily in Verizon's (or any operator's) interest to be truly open. High margin data services are pivotal to operators maintaining and building their market value. It will be very hard for them to maintain these margins when they commodotize data by opening the floodgates.

So, in all likelihood we can expect a lot of talk of openess, and some genuine steps in that direction. However, behind the scenes, the operators will still be doing everything they can to maintain as much control as they can hang on to.

So the message should be: we're optimistic but still vigilant. We cannot stop at the first step and two vague provisions alone will not guarantee unfettered access. I hope Google will continue to influence the industry to move in the right direction.

Bob said...

It would be great to have someone from Google participate in the Wireless Technolgy Forum's May 15 event in Atlanta with Nokia, Samsung, Symbian, Intel and others to discuss - "Convergence - How are devices driving the revolution?" This event is sponsorted by AT&T, IBM, Microsoft, Intel. Google has not accepted our invite.

Bob Mac - WTF Board

Pablofb said...

An impeccable strategic move for Google. Although I acknowledge that I would have liked to see what would you have done with the spectrum if you had been winners XDD