dslreports logo
site
spacer

spacer
 
   
spc
story category
Google, You're a Wireless Tease
Sorry to contradict the "Google's loss was a win" meme, but...
by Karl Bode 11:39AM Friday Mar 21 2008
Give them some credit -- before the 700Mhz auction Google lawyer and lobbyist Richard Whitt argued that the game was rigged, and that it was nearly impossible for a pesky upstart to beat AT&T and Verizon in the 700Mhz auction. While Google got a lot of attention pretending that they'd give it a shot, the end results indicate the search giant didn't try very hard, winning no licenses and essentially bidding to lose.

Still, Google posted to their policy blog that the auction, in which the last great batch of wireless spectrum was gobbled up by industry incumbents, "produced a major victory for American consumers." In a statement shortly after the winners were announced, Google insisted that "Consumers soon should begin enjoying new, Internet-like freedom to get the most out of their mobile phones and other wireless devices."

Yes, here's the part where we're supposed to tell you that Google's loss was actually a win, because Google forced the FCC to attach some barely enforceable Carter-fone "open access" conditions to the spectrum, resulting in a brave new world of wireless connectivity. Sorry, that's nonsense. In the years we've watched AT&T and Verizon at work, there's not a law, condition, or requirement their lobbyists haven't been able to wiggle around, through or over -- given enough time and resources. To expect otherwise here is folly.

And if you think Verizon is upset because Google managed to nudge the spectrum price tag up by a billion or two, you're underestimating Verizon's profit margins. Spending decades charging grandmothers seven bucks and up for a feature like caller ID (that costs pennies to provide) does have some benefits, you know. Making Verizon overpay for something is kind of like making Lance Armstrong bike another twenty yards and then screaming victory.

The most Google accomplished was to make a small ripple in the very large pond that AT&T and Verizon inhabit. While the auction's biggest winner, Verizon, is taking baby steps toward "open access," those steps are largely showmanship, over-stated by the media, and will come at a steep premium for consumers. The primary focus will remain on promoting their traditional phone options, with "open access" connectivity offered begrudgingly as a luxury service (with a highly restrictive terms of service). It will remain business as usual.

Google is an advertising company concerned with selling ads, and never intended to be a philanthropic network operator. While they could have teamed with another company to build and manage the network, existing partners such as Sprint or Clearwire were in no position to extend themselves. Google's only play here was a political one, and its impact was negligible. In the end Google created little more than a whirlwind of free press for the Google brand, while the last great hope for wireless broadband competition evaporated into the digital ether.

view:
topics flat nest 
Alphy

join:2001-12-31
Troy, MI

Precisely

Nothing more needs to be said.

NOCMan
MadMacHatter
Premium
join:2004-09-30
Colorado Springs, CO

Re: Precisely

I bet there will be some way that VZ gets out of the open access requirements.

Is it any wonder when the rumors heated up they came out with thier own open access program?

jgkolt
Premium
join:2004-02-21
Avon, OH

Re: Precisely

no they will probably have open access which you would pay a premium to access which will make their offerings more attractive. nuff said.
--
Learning how to invest. Sign up to get 3 free trades for you and me each. Personal Message me. Thanks

Lark3po
Premium
join:2003-08-05
Madison, AL

Backlash?

Maybe Google will feel a little backlash for playing with the consumers heartstings...

FFH5
Premium
join:2002-03-03
Tavistock NJ
kudos:5

Google won a VERY small victory - for now

Running a wireless company is outside their area of expertise. And the cost of the license is just a very small part of the total cost to build a wireless business. And Google surely didn't want the headaches of dealing with governmental agencies(local, state, federal) all over the country. And they also would have had to expand their customer service and sales organizations by an order of magnitude if they got in to running a wireless business. Believe me - they did not want any of those headaches. They wanted all the ad $ gravy an open network could give them, but none of the headaches.

By getting the FCC to put open access rules on the C block spectrum, they pulled a fast one on all the wireless companies - at least for now. The wireless companies get their crack at getting even when they start to use that spectrum and make life difficult for Google to actually cash in on what they got thru lobbying.
--
My BLOG .. .. Internet News .. .. My Web Page

BillRoland
Premium
join:2001-01-21
Ocala, FL
kudos:3
Reviews:
·Cox HSI

1 recommendation

Good article

This is one of the more realistic articles written about Google that I've seen. Too many saps seem to get caught up in Google-mania, believing that somehow Google is "good" and its intentions are pure. Folks, Google's in it for the money. They're not offering anything free, nor are they going to try and change the world if they don't see any money for themselves in it. And there's nothing wrong with that, that's what companies exist for, but please lets stop pretending that Google is somehow morally superior to others out there. They're not.
--
"Don't steal. The government hates competition."

CylonRed
Premium,MVM
join:2000-07-06
Bloom County

Re: Good article

And we have a WINNNNAR....!
Katzendreck

join:2003-09-29
Calgary, AB
So they are a company after all..

Brilliant.
axus

join:2001-06-18
Washington, DC
Reviews:
·Comcast

rigged?

I can't see how you can call an auction rigged, unless you weren't allowed to bid at all. Whoever is willing to pay the most money wins, I don't think it can be more fair than that. Taxpayers get the money, and the people who paid for the license will build something there.

Google didn't have enough money to pull this off, that's too bad. I think they could have grown the market more than Verizon will, but it's up to their shareholders and board to decide that.

Matt3
All noise, no signal.
Premium
join:2003-07-20
Jamestown, NC
kudos:12

Re: rigged?

said by axus:

I can't see how you can call an auction rigged, unless you weren't allowed to bid at all. Whoever is willing to pay the most money wins, I don't think it can be more fair than that. Taxpayers get the money, and the people who paid for the license will build something there.

Google didn't have enough money to pull this off, that's too bad. I think they could have grown the market more than Verizon will, but it's up to their shareholders and board to decide that.
Whomever has the most money wins is not fair. By the rules of this auction it is, but in the case of the public spectrum, this was a most decidedly unfair auction and will not result in any new or innovative technology for the public as a whole.

We will get a new technology in 10 years time from Verizon and AT&T, which will have usage caps, be locked to the original provider, have draconian contracts with ridiculous early termination fees, and be prohibitively expensive. In other words, nothing will change.

RadioDoc
Premium,ExMod 2000-03
join:2000-05-11
La Grange, IL
kudos:2

Re: rigged?

said by Matt3:

but in the case of the public spectrum, this was a most decidedly unfair auction and will not result in any new or innovative technology for the public as a whole.
Please explain how this is "decidedly unfair". Every single one of these is for "public spectrum", and they are mandated by Congress. Did you read the auction documentation or are you just upset that Google played you?
--
Toolmaster of La Grange.

Matt3
All noise, no signal.
Premium
join:2003-07-20
Jamestown, NC
kudos:12

Re: rigged?

said by RadioDoc:

said by Matt3:

but in the case of the public spectrum, this was a most decidedly unfair auction and will not result in any new or innovative technology for the public as a whole.
Please explain how this is "decidedly unfair". Every single one of these is for "public spectrum", and they are mandated by Congress. Did you read the auction documentation or are you just upset that Google played you?
I could care less that about the whole Google fiasco. I'm upset that the system caters to the incumbents who have the most money. It doesn't allow for an upstart to win any valuable spectrum ... so the system is unfairly biased toward whomever has the deepest pockets. IN this case, Verizon and AT&T. Yet again.

RadioDoc
Premium,ExMod 2000-03
join:2000-05-11
La Grange, IL
kudos:2

Re: rigged?

You probably don't understand bidding credits and bid multipliers.

Any startup wanting to get in on this could have.
--
Toolmaster of La Grange.
stonecolddsl
Linux Junkie

join:2004-01-07
Sarasota, FL
I think that a lot of people missed the fact that there was 3 large bidders, VZ,ATT, and Dish who walked away with the most in terms of total area coverage of the 700mhz auction.
What Dish/Echostar have planned for it no one knows but they did walk away with the most markets licences. But they do lack a few major markets that ATT and Verizon simply out bid on which were Boston, NYC, LA..

Karl Bode
News Guy
join:2000-03-02
kudos:39

Re: rigged?

The spectrum Echostar/Dish won is for one-way transmission....
EPS4

join:2008-02-13
Hingham, MA
There's a big issue for any startup- they can't use this spectrum at all until next year, but they'd have to pay for it right now- a down payment within ten days, and the full balance within twenty... Honestly, that part of the auction seems the most biased against startup wireless companies to me.

Karl Bode
News Guy
join:2000-03-02
kudos:39

Re: rigged?

AT&T dropped a cool billion in down payment today...
hoyleysox
Premium
join:2003-11-07
Long Beach, CA
silly. They won't give it to some a financially weak upstart company because that company does not have the financial resources to build a network. All some upstart would do is sell the frequencies to another company at an inflated price.

David
I start new work on
Premium,VIP
join:2002-05-30
Granite City, IL
kudos:101
Reviews:
·DIRECTV
·AT&T Midwest
·magicjack.com
·Google Voice

Re: rigged?

at almost $600 a share of stock are they really that financially weak? They could have built a small start-up network called it a beta like they call everything else and the public would have been happy cause it's google!

And the good thing is, that it would be beta, which means people would put up with the problems and not complain because "It's google!, and it's Beta!"
axus

join:2001-06-18
Washington, DC
Reviews:
·Comcast
said by Matt3:

said by axus:

I can't see how you can call an auction rigged, unless you weren't allowed to bid at all. Whoever is willing to pay the most money wins, I don't think it can be more fair than that. Taxpayers get the money, and the people who paid for the license will build something there.

Google didn't have enough money to pull this off, that's too bad. I think they could have grown the market more than Verizon will, but it's up to their shareholders and board to decide that.
Whomever has the most money wins is not fair. By the rules of this auction it is, but in the case of the public spectrum, this was a most decidedly unfair auction and will not result in any new or innovative technology for the public as a whole.

We will get a new technology in 10 years time from Verizon and AT&T, which will have usage caps, be locked to the original provider, have draconian contracts with ridiculous early termination fees, and be prohibitively expensive. In other words, nothing will change.
I think "most money wins" is more fair than subjective feelings about how "good" or "bad" a company is. If you have subjective measurements like that, the potential for corruption goes up. You do know that Martin has a soft spot for telcos, right?

If the FCC had put a value on certain promises, say "promises not to restrict the devices are worth 2 billion", we'd be in the same situation we are now, with 2 billion less.

RadioDoc
Premium,ExMod 2000-03
join:2000-05-11
La Grange, IL
kudos:2

2 recommendations

Thanks Karl.

It's about time Google started to be called what they are, which is an "advertising company concerned with selling ads". I would complete that thought by including "a publicly traded" in that sentence before "advertising". Their duty is to their shareholders and if that somehow benefits a customer here and there then great.

They do marketing by press release. Unfortunately a lot of the press swallows it whole without a single critical thought.

Thanks for shining the light.
--
Toolmaster of La Grange.
Fisamo
Premium
join:2004-02-20
Apex, NC
Reviews:
·Earthlink Cable ..
·VOIPO

Re: Thanks Karl.

Agreed.

Based on the posts in the forum attached to yesterday's article about the spectrum winners, it's apparent that it wasn't just the press that was swallowing Google's releases without much critical thought.

Google didn't fail anyone, as they never promised to win any of the spectrum...

decadent7
Premium
join:2002-04-02
Piscataway, NJ

Re: Thanks Karl.

I think, the price of wireless spectrum has been inflated by Google participation, i.e. telco has overpaid for it. There is saying: "Generals always prepare to fight the last war". Wireless voice market is near saturation and telco won't be able to get the same revenue for data as voice. It is actually the same was with landlines. Voice was true cash cows, not DSL. Otherwise they would not go to video market. I think, in near future they start selling unused spectrum for 30%-50% of original price.

Karl Bode
News Guy
join:2000-03-02
kudos:39

3 edits

Re: Thanks Karl.

Making Verizon overpay for something is like saying you forced someone with a 70 IQ to say something stupid.

It's negligible and irrelevant. Verizon would have spent twice that if it meant protecting their massive profit margins (caller ID, SMS, MMS) long term -- without batting an eyelash. Verizon is an epic U.S. business operation with one of the most powerful lobbying machine's on K-Street, and Google just started lobbying Uncle Sam last month or so...

Bink63
Namedrop THIS
Premium
join:2002-10-06
Everywhere

Re: Thanks Karl.

said by Karl Bode:

...is like saying you forced someone with a 70 IQ to say something stupid.
I resemble that remark!

Karl Bode
News Guy
join:2000-03-02
kudos:39
quote:
a lot of the press swallows it whole without a single critical thought.
All of the press.

Every single report I've read this morning suggests Google was "winning by losing":

»news.google.com/news?oe=utf-8&rl···rch+News

It's suddenly like we're in one of those highly progressive self-help education classes where nobody loses.

Not everyone, Karl

said by Karl Bode:

quote:
a lot of the press swallows it whole without a single critical thought.
All of the press.
Not all of the press:
»www.webpronews.com/topnews/2008/···se-loses

You wrote it far better than I did, but not everybody saw this as some kind of Google victory for the ages.

RadioDoc
Premium,ExMod 2000-03
join:2000-05-11
La Grange, IL
kudos:2

Re: Not everyone, Karl

"Only the prospect of Google or a similarly-minded company winning the spectrum excited us. Imagine if Google's nascent Android mobile platform would have arrived at one of the big Asian manufacturing firms with specs for a 700MHz antenna in place."

Well, you weren't giggling and grinning that Google had somehow fooled the big guys into their tent but are still giving them a pass on intent.

As Karl put it much more generally, Google is an advertising company. The only interest they had in this auction was to make sure their ad model was not totally locked out of whatever "new" services climb from the swamp. You're still talking like they are some benevolent rich uncle making sure the bullies don't take over the playground. In reality they are more like that odd guy in his trench coat sitting on the bench every day, watching.
--
Toolmaster of La Grange.

Re: Not everyone, Karl

I think it's more that I gave Google the benefit of the doubt. The ability to drop a few hundred thousand phones carry Google advertising onto the mobile market, with voice/data priced much lower than the entrenched wireless companies offer.

Think what you will about Google, such a scenario could have created an amazing shift in the market.

RadioDoc
Premium,ExMod 2000-03
join:2000-05-11
La Grange, IL
kudos:2

Re: Not everyone, Karl

So could free, unlimited service delivered by flying monkeys. Which has about the same probability of happening.
--
Toolmaster of La Grange.

David Utter

@insightbb.com

Re: Not everyone, Karl

said by RadioDoc:

So could free, unlimited service delivered by flying monkeys. Which has about the same probability of happening.
So that's how Google plans to deliver wi-fi without interfering with TV or wireless mikes! Cool! Good catch RadioDoc.

David
I start new work on
Premium,VIP
join:2002-05-30
Granite City, IL
kudos:101
Reviews:
·DIRECTV
·AT&T Midwest
·magicjack.com
·Google Voice

I think it's most interesting

that google stock is at almost $600 a share and they couldn't bid on a spectrum? As far as the game rigged, that's hogwash. They had the cash, they didn't want to spend it.

This is no more AT&T and verizon's fault than just bidding. Google could have bid too, but they didn't. I call google the little engine that could, but don't repeatedly.

They would have only been a serious threat, had they bid and won something.

Basically google made their bed now they can sleep in it.
--
If you have a topic in the direct forum please reply to it or a post of mine, I get a notification when you do this.
Koetting Ford, Granite City, illinois... YOU'RE FIRED!!

•••

jig

join:2001-01-05
Hacienda Heights, CA

this article is BS

i don't see any links to how the bidding went forward. do you not remember that MS put out what seemed like a serious bid on yahoo right when the bidding on the c block was reaching the neutrality stage? why is it so hard to see that google could have been seeing what looked like a liquidity battle looming and decided it couldn't risk the investment? further, the rest of the article is basically blaming google for trying, which is ludicrous. not to mention the fact that while att and verizon have had free rein under the republican presidency and FCC chairmanship, that can all change in a heart beat in november.

basic idea - don't blame the innocent for trying, regardless of whether it was just all talk or not (and you have no evidence it WAS all talk, all you have is a list of winning bidders and google, a company that had to seriously consider fighting a hostile MS takeover of yahoo.

doesn't it even register that it took att and verizon teaming up to beat out what might have been a real effort on google's part?

you're all a bunch of reverse pollyannas. and to boot (or as a result), your analysis is about as superficial as it gets.
--
Catapultam habeo. Nisi pecuniam omnem mihi dabis, ad caput tuum saxum immane mittam.

No to ESPN

@comcast.net

Let the Lawsuits Begin

VZW is becoming a company that attracts lawsuits like a honey wagon attract flys and for the same reason. I wonder if Google set them up. After the 8830 GPS issue I sure hope so. I am waiting to see how the class action lawsuit on that one comes out.