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Google Interest in Spectrum Part of 'Ambitious' Plan

Google Interest in Spectrum Part of By Richard Koman
August 23, 2007 1:26PM

Google's emphasis on openness -- free speech, network neutrality, universal broadband, and government transparency -- is part of Google's plan to control the network and trivialize competitors, said analyst Rob Enderle. "It doesn't matter who you get your phone from, whose operating system you run, if the only one making money is Google."

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Google will "probably" participate in the Federal Communications Commission's upcoming auction of the 700-MHz spectrum, CEO Eric Schmidt said Wednesday. Speaking at the Peace and Freedom Foundation's Aspen Summit, Schmidt seemed to contradict earlier statements that Google would only participate in the auction if the FCC adopted its proposed rules.

In a decision a few weeks ago, the FCC declined to adopt Google's proposed open access rules, voting instead for more limited rules proposed by FCC Chair Kevin Martin. Under the approved rules, one of five spectrum blocks to be sold will carry rules making it more open to devices and applications. The spectrum, formerly used by television broadcasters, is especially valuable because it can travel long distances and isn't impeded by buildings.

Since losing at the FCC, Google has largely changed its tune. Wednesday, Schmidt said that the FCC "got the spirit of what we were asking for" in approving Martin's proposal.

The Net: Google's Platform

The announcement touched off speculation about why Google wants to bid on the spectrum. Rob Enderle, principal analyst for the Enderle Group, said that Google's interest in the spectrum is part of a "very ambitious plan" to turn the Internet and mobile networks into "their platform."

"They clearly want to be the nation's contact to the Web and communications," he said. "It's a very ambitious plan -- they could be vastly more powerful than any technology company has ever been." While it might seem hard to conceive of Google as running a mobile phone network or broadband network, Google's plans do extend that far, according to Enderle.

"They would deliver telephony Relevant Products/Services and data solutions over the network," he said. In this scenario, every other company's services turn into commodities, while Google "makes sure the value is close to where they get their money."

Commoditizing Everything?

Google's emphasis on openness -- and Schmidt's talk Wednesday stressing the themes of free speech, network neutrality, universal broadband, and government transparency -- is part of the plan to control the network and trivialize competitors, Enderle said. "It doesn't matter who you get your phone from, whose operating system you run, if the only one making money is Google."

Just as Google has aggregated the news content created by media companies and moved advertising across hundreds of thousands of blogs and Web sites, he pointed out, several other industries are in danger of being similarly commoditized out of business.

YouTube is a perfect fit for Google, Enderle said, because amateurs create most of the content and Google can sell advertising on top of it. As with AdWords, Google decides how much revenue to share with producers and it's typically a very small cut. "Google controls the stream," he said.

Seen as part of a strategy to make the Internet itself into the Google platform, the impact of Google's participation in the spectrum auction affects more than the telecom industry. "When they're done, there isn't a tech company that won't be affected," Enderle said.