Wireless War: Google Puts Its Money Where Its Mouth Is

Take that, Verizon! Google said today that it’s happy to spend at least $4.6 billion in the FCC’s forthcoming wireless spectrum auction. The catch is that Google will only play if the FCC changes the rules by which the spectrum can be used. Google wants the agency to enact usage rules that promote open access to wireless applications, devices, services, and networks. That’s the exact opposite of the business model that giants like Basking Ridge, N.J.-based Verizon Wireless have enjoyed for years.

Open access would transform the wireless world into something resembling today’s Internet: You would be able to buy any device and use it with any service provider, the same way you can with PCs and Internet access providers on the Internet. This is in contrast to today’s wireless system, where phones and PDAs are usually sold by the wireless carriers and “locked” so they can be used only with that carrier’s network. The carriers justify this practice by noting that the “lock” is provided in exchange for a device subsidy, and argue that there is already plenty of competition.

In any case, Google has been pushing for open access for a while. They’re allied with a coalition led by Amol Sarva, a Virgin Mobile co-founder now running New York startup Txtbl, which has recently made the rounds in Washington. The news here is that Google has now committed to actually putting up cash in the spectrum auction. The announcement comes in response to a Verizon volley Thursday in which the company basically told Google to drop dead:


“To rig the 700 MHz auction in any way [i.e., to make it so the usage rules would benefit Google more than Verizon] — to limit its value and potential to deliver exciting new products and services — would be a huge disservice to the nation,” said Verizon in a press release with no executive attribution. “Corporate welfare for Google is bad public policy.”

The technorati love to harp on the closed networks run by the U.S. carriers, and they have a point — there’s lots of cool technology in the works that could come to market quicker with open networks. But that doesn’t mean that device makers’ interests are in line with consumers’. Apple may still have more to gain financially by locking its iPhone devices to business partner AT&T’s network instead of embracing a wireless free-for-all. And don’t ignore Google’s profit motive, either. The mobile Web is a huge growth target for the search giant, and more people browsing on-the-go means more ad revenue.

This isn’t the first time Google has battled with Verizon. Last year, the companies traded barbs in a policy debate about “network neutrality” — whether broadband providers like Verizon should be able to charge content companies like Google a surcharge for priority access to their pipes. John Thorne, a top attorney for Verizon Wireless parent Verizon Communications, lashed out at the search company at a conference last February: “The network builders are spending a fortune constructing and maintaining the networks that Google intends to ride on with nothing but cheap servers,” Thorne said. “It is enjoying a free lunch that should, by any rational account, be the lunch of the facilities providers.”

As Google grows closer to potentially becoming a large-scale telecom provider, expect this skirmish to heat up.

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