Why Google Won't Become A Phone Company

Google is planning on bidding in next year’s wireless spectrum auction, and the WSJ suggests the company could be interested in building a wireless network and becoming a mobile phone carrier. We don’t think so. Unless Eric Schmidt plans to drastically shift Google’s business strategy overnight, it makes no sense for Google to buy its way into the capital and time-intensive industry. So what will it do? Some options:

1) Bid, win, and stand back. Spectrum is rare and valuable. An Intel VP calls the swath up for auction a “national treasure.” Google could buy the spectrum like real estate, lease it to someone to build/run the network, and still hook its Android devices up to it.

2) Bid with partners — like a carrier — build a network collectively, stay as far away as possible from the network building, and run the Google-centric portions of it: advertising, search/content/portal/email.

3) Not bid — or not bid aggressively — and just stir things up. Thanks in large part to Google’s prodding, the FCC will require the winner of the biggest chunk of spectrum to build an “open” network that can be used by any wireless device or software application. Perhaps Google sees a benefit in getting carrier partner/competitors to think it’s going to ante up.

See Also: Why Google Won’t Buy Sprint Nextel
Google Phones: Four Things We Still Don’t Know

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