So Google Will Bid For Spectrum. Will It Play To Win?

26 Comments

For the past few months, Google CEO Eric Schmidt has hinted at every opportunity that Google (GOOG) will bid for the auction of the 700 MHz spectrum. So it shouldn’t come as a surprise that they issued a press release today and confirmed that they will bid on the so-called C-block of the 700 MHz spectrum.Big deal — because Google is not in it to win it. Like in an opening move in a game of high-stakes poker, Google will place an opening bet, but is unlikely to raise it.Google CEO Eric Schmidt in the press release said:

No matter which bidder ultimately prevails, the real winners of this auction are American consumers who likely will see more choices than ever before in how they access the Internet.

Excuse me, that ain’t the language of a winner. Chris Sacca, Google’s head of special initiatives, in a blog post continues this “consumer-a-winner” theme, though clearly if Google did win this one, it is the winner first, and maybe…just maybe consumers. [Paint me cynical, but I like this change-the-world-consumer-first drivel from presidential candidates, not from for-profit companies with lofty valuations to protect.]

As I had pointed out earlier, FCC Chairman Kevin Martin included some of the Google proposals as part of the rules for this auction, hoping that would attract Google to the bidding process, and help drive up the prices of the spectrum being auctioned.The other companies playing with some seriousness here are AT&T, Verizon and a bunch of others. AT&T CEO Randall Stephenson confirmed his intentions at a Churchill Club event, while Verizon has been doing its best to ensure its win.

In case you want to know what the whole 700 MHz fuss is all about, here are two posts that tell you everything about 700 MHz.

* 700 MHz explained in 10 easy steps.

* Inside the 700 MHz Landgrab

26 Comments

Michael

Or google could keep saying they’re bidding the min….then totally slam the competition with a megabucks bid where they’re going to actually win it. The Telecom’s would never see it coming.

    --Michael
Tim Meyer

Winning or losing is a matter of who has the better game theorists.

yit

Google is always a winner, and they only bid on the important stuff, so if they want something its theirs, nothing to do about it.

Shai Machnes

Google is not playing to win. They are playing to lose.

My guess is that Google will bid the minimum to make the new “openness” rules stick, and no more. The last thing they really want is to be a Telco.

They just want the openness, so that the mobile Internet becomes a reality. More Internet, more search, more online apps, better for Google. Let the Telcos bid high, pay the money and quickly become the bit-pipes Google is aiming for them to be.

By playing to lose they get want they really want, without paying the big bucks and without the headache of becoming a Telco. A perfect poker bluff.

Andrew

Google bids on assets for competitive assets. Sometimes to win. Sometimes to drive up the price for a competitor. Ebay overpaid for Skype. Microsoft overpaid for Facebook. Don’t see anyone complaining about the youtube premium now do you?

Rick

Win or lose for Google? Now that google has pissed off the phone companies with their antics, can they expect the heat in return later?

Surely they won’t run up a bid in this auction, just to see the phone companies pay a higher price. I believe they put the minimum bid on the table; get the new rules; then walk away.

Jason Wood

Om,

Well said. I would expect GOOG will be at or just over the $4.6B minimum enforcement bid, if only to ensure that the openness caveats have to be honored by the winner (as you know, anything below $4.6B and all restrictions are removed).

And we can also be sure that AT&T and Verizon, who not only want the spectrum but REALLY want the spectrum, will bid well above that $4.6B figure.

The really stunning thing will be if GOOG bids significantly higher then that and, I think even THEY would be surprised if they won.

Chetan

After having watched John Dorer’s interview on Battellemedia, I guess its not Eric, but John Doerr is the man behind Spectrum Lobby. Also he is the man behind Google’s renewable energy plan, check out that video.

vic berggren

Perhaps the strategy here is to increase the price for the eventual winner while google has another plan in store to compete at a lower price with a carrier acquisition?

privacy please Google

Consumer-a-winner? While Google continues to profile consumers!! :-)

Hope they win spectrum game, but getting little tired of Google, honestly. Let’s hope open source search engine challenges Google. That’s when consumers will win.

Tony Casson

Completely agree. The real winner here is not the consumer as Chris Sacca points out – it is the US Treasury. If Google bids, the price goes up. If Google wins it will be at a higher price than the spectrum would have ordinarily commanded. This is the quid pro quo the FCC gets for the limited concessions it made to Google.

Rick

Right on. And that’s why these phone companies executives are so mad at Google. Google has come into their arena pretending to play ball, but throwing a knuckle ball, only to change the rules of the game. As a consumer, I’m glad for any positive changes that result. As a phone company CEO, I’m a bit rubbed by the foul play.

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