Google officially entered the hunt Nov. 30 for what is likely the most valuable spectrum to come on the market for a generation. The lingering question is, why?
After a successful summer campaign to convince the Federal Communications Commission to change the rules for Januarys 700MHz auction to require the winning bidder to build an open network, Google seemingly had won its point.
With the winning bidder obligated to offer an open network that will support the myriad wireless plans of Google, why would the Mountain View, Calif., search and advertising giant want to become a wireless carrier?
After Verizon dropped its lawsuit seeking to force the FCC to sell the spectrum to the highest bidder with no strings attached and AT&T crowed it was already an open network (at least according to CEO Randall Stephenson), it appeared Google had captured the minds, if not the hearts, of traditional carriers on the future direction of the wireless industry.
Yet, heres Google ready and willing to mix it up with AT&T and Verizon in a multi-billion dollar gamble for the analog spectrum being vacated by television broadcasters as part of the digital television transition.
Click here to read more about Googles plan to join the FCC spectrum auction.
"This resolves the uncertainty for now in terms of whether Google will bid or not, but still leaves unanswered the question of what Google is really up to here," Jan Dawson, the vice president of U.S. Enterprise Practice at Ovum Research, said in an analyst note. "The obvious thing to do with spectrum is clearly to become a mobile network operator, but that seems a bizarre move for Google to make at this time."
Dawson noted that if Google wins the spectrum, it would have to build a national, wireless network from scratch, a proposition that Google itself speculates would cost at least $12 billion and take as long as three years. Combined with the minimum spectrum bid of $4.6 billion, Google appears to be willing to spend almost $17 billion for a venture that on paper is far removed from Googles principle businesses.