Saturday, July 21, 2007

Google to take on wireless giants as its stock plunges/ 'Revolutionary' plan for high-speed access

Google to take on wireless giants as its stock plunges - 'Revolutionary' plan for high-speed access
By Jim Puzzanghera
Copyright © 2007, Chicago Tribune
July 21, 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 offered Friday to dig into its mountain of cash to transform a chunk of public airwaves into a high-speed data freeway. If successful, it could drive down the price of Internet access by creating more competitors for phone and cable companies.

Google promised to bid in a coming 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, 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.

The backlash didn't seem to faze co-founder Sergey Brin. "I guess there are some people out there who think we have already picked all the low-hanging, juicy fruit, but I think the jury is still out on how far we can take this business," he said.

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.

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.

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. 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.


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