Google eyes high-speed data freeway

http://www.latimes.com/business/la-fi-google21jul21,0,4303522.story?coll=la-home-center

From the Los Angeles Times
Google eyes high-speed data freeway
The search giant may help transform public airwaves, driving down the cost of internet access.
By Jim Puzzanghera
Times Staff Writer
July 20, 2007

WASHINGTON -- If Google Inc. has its way, your cell phone will work on any wireless network and companies will sell high-speed Internet access for cut-rate prices.

Google thinks that would be a wonderful world -- for consumers as well as its own bottom-line -- and is proposing to pony up $4.6 billion in a long-shot bid to create it.

The king of Web search Friday offered to dig into its mountain of cash to transform a chunk of prime public airwaves into a high-speed data freeway. If successful, it could drive down the price of Internet access by creating more competitors to phone and cable companies.

Google promised to bid in an upcoming federal auction of spectrum that is ideal for fast wireless Internet service -- but only if regulators agree to the company's proposals to require open access to those airwaves. That means any device, service, software application or network could operate on it with no restrictions.

"That would be revolutionary," said Bob Williams director of HearUsNow.org, a Web site run by Consumers Union that promotes telecommunications competition. "If you want high-speed Internet service, you basically have a choice of two, and in a lot of places you don't have any choice ... and that situation has to change."

Google told the Federal Communications Commission it would put up the minimum bid of $4.6 billion. The Mountain View, Calif.-based company wanted to prove its seriousness and counter big wireless companies such as AT&T Inc. and Verizon Communications Inc., which say the conditions would make the spectrum virtually worthless.

The offer is unlikely to sway the FCC. The agency thinks the airwaves being given up by TV broadcasters in 2009 as they switch to digital signals could fetch much more for the federal coffers.

But Google is showing its intention to influence one of the biggest spectrum auctions in the nation's history.

Google's offer comes at a time when investors are raising questions about how much money the company is spending to put its ambitious plans in place. Its stock fell more than 5 percent, to $520.12, Friday after big investments on hires and other expansion costs caused its second-quarter earnings to miss Wall Street's expectations.

Despite its promise to bid, Google actually might not want to license the airwaves itself. But it does want to force them open to increase competition with cable and phone companies -- and make it cheaper for people to get on the Web and use Google's growing array of services.

Wireless companies now control all access to the spectrum they license from the government, which is why, for example, Apple Inc.'s iPhone can't be used on any network other than AT&T's. Under Google's plan people could connect any device to any network and run any software they want on their phones, such as free Internet-based calling systems.

But most important for boosting competition, companies would have the right to use the airwaves at a wholesale price to offer their own Internet access.

"In short, when Americans can use the software and handsets of their choice, over open and competitive networks, they win," Google Chief Executive Eric Schmidt wrote in a letter to FCC Chairman Kevin J. Martin on Friday.

The effort is backed by public-interest groups and a coalition of major technology companies, including Intel Corp., eBay Inc., Yahoo Inc., DirecTV Group Inc. and EchoStar Communications Corp. But it faces huge obstacles in Washington, where the politically powerful phone companies have been fighting it.

Last week, Martin supported Google's plan to allow people to use any device or software on a network but not the more controversial open-access requirement that many view as the key to creating a viable nationwide competitor to phone and cable companies in broadband access.

Martin worried that imposing the conditions could make it difficult for auction winners to get funding to build their networks.

The FCC is still drawing up the rules for the airwave auction, and Google's plan is a longshot.

AT&T slammed Google's bid offer Friday, saying it was just an attempt to pressure the FCC to "stack the deck in its favor."

Under the traditional auction rules, Google says it and other companies can't outbid the big phone companies because of their built-in advantage of existing networks of cellular towers and pools of customers.

"It doesn't matter whether or not Google has the deep pockets -- at some point you've got to say this is just an unreasonable investment," said Richard Whitt, Google's telecom and media counsel in Washington. "We're just trying to un-skew things enough to give Google ... or a DirecTV or an EchoStar or a Yahoo or whoever comes in there at least a decent shot for the spectrum."

The spectrum is being given up by TV broadcasters in 2009 as they switch to digital signals and is considered ideal for providing wireless high-speed Internet access.

Rob Sanderson, an analyst with American Technology Research, said Google had much to gain from lowering the price of high-speed Internet access. But he doubted Google wanted to buy any airwaves and provide the service itself.

"They're really trying to encourage an environment where others ... can step in and become competitors," he said.