castledoom.com

[JuntaJoe]

I offer two articles to read. What I gather from these seems to make up the most important news story I've seen in years about personal computing. Why Google's stock price dropped is beyond me and if they pull this off it will make their stock skyrocket as they hammer all the telecoms into the dirt.


Google to FCC: Accept our rules and we'll bid

In its clearest statement of intent so far, Google Inc. said that it will compete in an upcoming wireless spectrum auction, if the government agrees to certain rules.

On Friday, Google sent a letter to the U.S. Federal Communications Commission chairman informing him that the company will commit a minimum of US$4.6 billion toward the auction, but only if certain conditions are met. Google spelled out those conditions in an earlier filing with the FCC.

The billion-dollar commitment could assure the FCC that if it does implement the conditions, it can expect to raise the amount of money it hopes to. "The odds are still against the FCC imposing the conditions Google seeks, but this significantly ups the ante," said Kevin Werbach, an assistant professor of legal studies at the Wharton School of the University of Pennsylvania and former counsel for new technology policy with the FCC.

Google's proposals are controversial for existing mobile operators, which could decide not to participate in the auction if the rules don't suit them, resulting in potentially less income to the government. On Thursday, Verizon Wireless said that complying with Google's ideas would amount to corporate welfare and bad public policy.

The $4.6 billion amount appears to be the figure that Google believes the FCC will require as a minimum price for the spectrum. In its letter to the FCC, Google wrote that it understood that a draft order from the commission had specified that figure. The FCC typically sets a minimum price to sell spectrum; if the minimum isn't met, the agency can cancel the auction.

"We're putting consumers' interests first and putting our money where our principles are -- to the tune of $4.6 billion," Chris Sacca, head of special initiatives at Google, wrote on the company's public policy blog.

AT&T Inc. interprets the move a bit differently. "Google is demanding the government stack the deck in its favor, limit competing bids, and effectively force wireless carriers to alter their business models to Google's liking," Jim Cicconi, AT&T senior executive vice president of external and legislative affairs, said in a statement on Friday. "We would repeat that Google should put up or shut up -- they can bid and enter the wireless market with any business model they prefer, then let consumers decide which model they like best."

The CTIA, an association representing mobile operators, had an equally harsh response to Google's move. "Google's letter to the FCC this morning highlights the Internet giant's scheme to have the 700 MHz auction rigged with special conditions in its favor," CTIA President and CEO Steve Largent said in a statement. "Google and its allies, with their collective market capitalization approaching half a trillion dollars, don't need a government handout at taxpayers' expense." The wireless industry welcomes new entrants into the business but companies shouldn't ask the government to custom-fit regulations to match their business plans, he said.

Google says that unless the FCC sets certain rules on the auction, existing large mobile operators will inevitably win the spectrum and competition in the market will stagnate. In order to prevent that, Google is urging the commission to ensure that end users can download any applications, services or content they want. Consumers should also be able to buy a phone and use it on any network. In addition, Google says the winner of the spectrum should be required to allow third parties to resell services over the network on a wholesale basis.

Some other groups, such as Frontline Wireless LLC, a company backed by luminaries including former FCC chief Reed Hundt and former Netscape CEO James Barksdale, have proposals similar to Google's.

AT&T argues that a draft proposal issued by FCC Chairman Kevin Martin allows Google to implement all the capabilities it wants, but the proposal just doesn't mandate them. "If our understandings are accurate, we believe Chairman Martin has struck an interesting and creative balance between the competing interests debating the Google Plan," Cicconi said in a statement released on Thursday. "The plan would enable the introduction of an alternative wireless business model without requiring changes in the business models of AT&T and others in what is a highly competitive wireless industry."

The proposal would allow Google to bid on the spectrum and test the model, AT&T said. If Google doesn't accept the proposals, it's a sign that the search giant's objective was "to use the government to stack the deck and force competitive wireless companies to abandon their chosen business models and instead adopt Google's model," he said.

Google has argued that unless spectrum winners are required to sell access to their networks on a wholesale basis, existing operators with deep pockets will win the licenses and be unlikely to offer wholesale access to their networks in an effort to thwart new competition.

While Google has been vocally urging the FCC to ensure that the spectrum can be used by any device and service, the company has until now hedged on questions about whether or not it plans to bid for the spectrum.

The FCC auction for 700-MHz spectrum is expected to happen next year. The frequencies are considered prime for mobile communications because signals sent through them can travel far and can penetrate walls better than higher frequencies. Much of the similar spectrum is already spoken for so this auction is considered a rare opportunity.

In a perhaps related announcement, on Friday U.K. femtocell maker Ubiquisys Ltd. said that Google has invested in the company. Femtocells are small base stations that can be used in homes or offices to improve mobile phone coverage. Ubiquisys' current products operate over 3G (third generation) networks.

Copyright © 2007 PC World Communications, Inc.



The FCC Needs To Listen To Google

I was very pleased to see Google publicly wade into the upcoming FCC auctions for the 700MHz spectrum that will occur early next year. Should all go well, the new spectrum could be used to create a new open-access wireless broadband “pipe” into people’s homes and devices. If things go less well, the existing wireless giants would buy the spectrum and impose similar usage restrictions that exist on cellular networks in the U.S. today, putting us further behind Europe and Asia.

CEO Eric Schmidt sent a letter to FCC Chairman Kevin Martin stating that they would commit to bid at least $4.6 billion in the auctions if four key platform rules are adopted. These rules will define what types of services the winner could offer, and would require third party access to the bandwidth:

1. Open applications: Consumers should be able to download and utilize any software applications, content, or services they desire;
2. Open devices: Consumers should be able to utilize a handheld communications device with whatever wireless network they prefer;
3. Open services: Third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and
4. Open networks: Third parties (like internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee’s wireless network.

Given the sorry state of the mobile landscape in the U.S., I’d expect the FCC to adopt these pro-consumer rules without any fuss. But the incumbent players, including AT&T and Verizon, are saying they are opposed to open access and may not participate if these rules are adopted. Google’s public move was made to let the FCC (and the public) know that there are companies very happy to bid in an open-access world.

AT&T’s response to Google’s letter was breathtaking in its audacity:

Not satisfied with a compromise proposal from Chairman Martin that meets most of its conditions, Google has now delivered an all or nothing ultimatum to the U.S. Government, insisting that every single one of their conditions “must” be met or they will not participate in the spectrum auction. Google is demanding the Government stack the deck in its favor, limit competing bids, and effectively force wireless carriers to alter their business models to Google’s liking. We would repeat that Google should put up or shut up— they can bid and enter the wireless market with any business model they prefer, then let consumers decide which model they like best.

For anyone who doesn’t look too closely at the issue, AT&T’s response seems very reasonable: keep government regulation out of the spectrum let the market decide which services win. But that isn’t really what would happen at all. If fewer government restrictions are placed on the bandwidth the auction winners will be able to extract more profits at the expense of competitors and consumers. So naturally they don’t want to see open access rules like those recommended by Google. The incumbents also don’t want to see Google play in their sandbox and bidding against them - so they have yet another reason to oppose their proposal.

The FCC has competing goals of maximizing revenue from the auction (suggesting less regulation) and protecting the public (suggesting more rules to force competition). Having open access requirements like those suggested by Google will spur competition and grow an economy around this spectrum. It will also put commercial pressure on mobile operators and broadband companies to reduce the restrictions they have on current broadband and mobile services.

Google isn’t always not evil, but in this case they are going to bat for all of us against some players with pretty bad history when it comes to offering consumer products. I’m behind them on this. And to the FCC: please learn from past mistakes, ignore the lobbyists this time, and do what is in the best interests of the public.

Copyright 2007 Techcrunch.com

[s_stabeler]

good for google. all they want is to put wireless on the same terms as wired in the UK. over here, BT is forced to allow use of it;'s lines at wholesale prices. these rules will mean greater choice for the consumer( especially if it is across the whole spectrum, not just across the band that is up for auction)

[JuntaJoe]

As everyone in the US should know, every television signal is going digital in a year. No more analog signals. This bandwidth that was used by the major tv networks is prime frequency territory.

Everyone knows that current analog tv signals penetrate walls and buildings very well, unlike current frequencies used by cell carriers today. These frequencies will be used by telecom companies to give significantly better reception.

To say the telecom companies are drooling over the prospect of getting the rights to these frequencies is an understatement.

But the telecoms want to buy use of these frequencies permanently and are willing to throw serious money and lobbyists at the FCC to get use of them forever.

Google wants to demand that the FCC only licenses the use of the frequencies and not give permanent concessions.

By doing this, Google can jump into the market and give almost free wireless high speed service and VOIP service to everyone because they will earn their money from advertising instead of user fees.

The telecoms face losing massive revenue and communications hegemony if this happens. They will likely threaten to underbid for the rights to these frequencies and cause the FCC to lose many billions in bid fees.

Expect this to get very nasty in Washington as the pork begins to fly in many directions.

But if Google pulls this off their sky high share price will seem like a bargain as it climbs into the stratosphere.

Smart investors might be wise to bite the bullet on the current share price and buy a small amount of shares. You may lose a little if Google fails, but not much. But if they win then you could easily double your money or more.