Google's battle for wireless spectrum

Mon Jul 30 11:39:27 PDT 2007
By Marguerite Reardon

An upcoming Federal Communications Commission spectrum auction is pitting search giant Google against the largest phone companies in the country in a public-policy battle that could determine how Americans access the Internet in the future.

The 700MHz spectrum, which has been used to provide analog TV service, is considered the last piece of prime real estate left among wireless airwaves because it's able to travel long distances and penetrate walls. Everyone from mobile operators to public-safety companies to Google sees the spectrum as a perfect opportunity to extend mobile broadband services.

Google's plans to participate in the auction is a move likely to upset the traditional spectrum auction applecart.

The company is pushing the FCC to adopt rules in the upcoming 700-megahertz auction set to ensure that winners of certain spectrum licenses will have to adhere to four openness principles. These include guaranteeing that consumers can use any device or software on the network, as well as forcing winning bidders to offer spectrum at reasonable wholesale prices to ensure that small companies can get access to wireless capacity to build competitive wireless services.

AT&T and Verizon Wireless, the two largest wireless operators in the United States, say they would accept an open-access rule for devices, but they are against any rules guaranteeing open access for companies seeking to buy wholesale capacity.

Chris Sacca, head of special initiatives at Google, is in charge of looking for alternative forms of broadband access for the company. And he's one of the leaders in Google's fight in Washington to guarantee open access in the upcoming auction.

Up to this point, Sacca, who came to Google in 2003, was best known for initiating Google's free citywide Wi-Fi projects being built in San Francisco and Mountain View, Calif.

CNET News.com talked with Sacca recently to find out why this issue is so important to Google, whether the company really plans on bidding in the auction slated for early next year, and what it plans to do with the licenses if it wins them. Below are edited excerpts of the conversation.

Q: Why is Google so interested in the upcoming 700MHz auction?
Sacca: The 700MHz spectrum auction represents the last big chance that the United States has to create an opportunity for meaningful change in access to the Internet for the broadest set of people possible.

We have fought hard on a number of fronts to make the Internet as available as possible to the largest number of people as possible. Right now, the Internet is not available in too many places. And it's still too expensive for most folks.

But why is Google, in particular, interested in this spectrum?
Sacca: I think it's consistent with our company mission statement and consistent with our history of interaction with users. We have fought hard on a number of fronts to make the Internet as available as possible to the largest number of people as possible. Right now, the Internet is not available in too many places. And it's still too expensive for most folks.

If Google bids and wins licenses in the spectrum auction, does the company have plans to build and operate its own wireless network, or would it wholesale the capacity to other providers?
Sacca: The strategy is best defined by the goal. And the goal is, "What is going to make the Internet most available to the broadest number of people at the lowest price possible?"

Right now, in an environment where there isn't a lot of competition in the wireline or the wireless space, we have seen the impact. Prices are too high, availability is restricted to some geographic areas, and too many people are left off the Net.

But today, there are at least four nationwide carriers to choose from in almost every major city. So competition seems to be working well in the wireless market, wouldn't you say?
Sacca: But four doesn't necessarily create a competitive environment. And four doesn't necessarily reflect what consumers demand. Think of the issue of local-number portability. For years, consumers demanded the ability to take their mobile-phone numbers to another operator, and it wasn't until the FCC actually acted and mandated number portability that it became a reality.

So this isn't an entirely competitive marketplace right now. Prices are still way too high, and I think you'd be hard-pressed to find a large number of consumers who are satisfied with the cost of their service, the availability of their service and the features that the service offers.

To go back to my question, does Google want to own and operate a wireless network of its own?
Sacca: Google is willing to do anything necessary to introduce some competition into this space and to really drive the prices of service to where they are most affordable to the broadest number of people. It is reprehensible that there are still so many people left off the Net.

That entails everything from building and operating a network, if necessary, to partnering with the vast number of companies left out of this game--for whom $5 billion is an insurmountable hurdle to participate meaningfully in an auction that could introduce true competition--to any of the existing carriers, if they want to put users first in their business models and prioritize those customer experiences.

Google has recently said it would bid on the 700MHz spectrum only if the FCC guarantees certain open-access principles, including open access for companies wanting to buy wireless capacity wholesale. Does this mean that Google won't bid on spectrum if the rules aren't adopted?
Sacca: To be clear, what we said was not exactly that. What we said was that there had been some concerns that somehow imposing these openness principles on the spectrum might diminish its value at auction. And we wanted to reassure the FCC that embracing a path of full openness in the interest of users and the interest of consumers would not reduce the total revenue of the auction. And we wanted to put our money where our mouth is, and we are putting our money where our principles are. So we committed to spending a minimum of $4.6 billion in the auction, if they adopted all four principles.

So it's not out of the question that Google would participate in the auction, even if the FCC doesn't adopt all four principles?
Sacca: We are deeply committed to changing this industry for the benefit of end users.

Do you think FCC Chairman Kevin Martin's proposal, which includes open-access requirements for handsets and software applications but not for wholesale, goes far enough in ensuring competition in the market?
Sacca: I don't. But I am proud of the chairman for taking some pretty significant steps. And I think what we have seen is that he has support on both sides of the aisle to embrace these openness principles.

It was amazing to see at the hearing last week Democrats and Republicans both cheering efforts to correct some of the deficiencies in this market. Users are unhappy. They don't have choice in software. They don't have choice in where to go on the Internet. They don't have the choice of which handset to use. And the costs for service have been too high.

We think, in addition to the principles of open handsets and software, it's important to embrace wholesale as well, because wholesale will provide the opportunity for other smaller entrants to come up and be meaningful competitors.

When I saw that Verizon Wireless and AT&T said they would support Chairman Martin's proposal, it raised a red flag to me. I mean, you know as well as I do, these guys don't give up any fight that they think could damage their businesses. So it made me think that maybe Martin's proposal wouldn't have much impact on the market anyway. What do you think?
Sacca: I think your instincts are probably right. I think we do have to question when Verizon and AT&T jump to accept any proposal. We have to look at what their ulterior motives are. And that is why it was great to see Congress and so many activists be clear about the need for specificity and the need for timeliness and the need for clear enforcement for any of these openness principles.

You can't really find anyone who is satisfied with their mobile service right now. When you start talking to people, and they start to see the issues at stake, that is when we start to see the impetus for real change.

But one thing that everyone has been underestimating here is the will of the American people. We have seen so much press and coverage on this issue that we're starting to understand the frustration with mobile services that American consumers feel. You can't really find anyone who is satisfied with their mobile service right now. When you start talking to people, and they start to see the issues at stake, that is when we start to see the impetus for real change. I expect the change to impact well beyond the 700MHz auction as consumers become more aware of their options and start to demand improvement.

Chairman Martin has rarely proposed any regulation that could hurt the phone companies. Do you think his proposal was an empty attempt to show that he cares about consumers?
Sacca: No, I think he is trying to balance a lot of different interests. And so far, I think he has done a pretty good job. But as more and more people come up to speed on the nuances of this debate, I think we are starting to see consumers feel more empowered to express themselves and to demand the service that they really deserve.

Does the 700MHz auction plan fit into Google's citywide Wi-Fi plans at all? For example, is this a way to knit Google's citywide networks into a bigger nationwide network?
Sacca: I started the citywide Wi-Fi project not to become an ISP (Internet service provider), but because we saw that entrepreneurs around the country were willing to take the entrepreneurial risk to build networks and grant customers a meaningful alternative choice of access in what for most of the country is a duopoly but for half the country is just one or zero broadband access providers.

And yet incumbents were suing the cities, who were collaborating with entrepreneurs to try to build Wi-Fi access across their cities. I was frustrated by that, so I said, "Let's go ahead and show the country that these networks work. And we can act as a model to hopefully inspire development in other places." So far, we have seen 400-plus cities build out these networks.

Google has a lot of initiatives going on around wireless. What is its strategy when it comes to mobile? Does it differ from the company's traditional Internet strategy?
Sacca: The company's mission statement is to organize all the world's information, make it universally accessible and useful. So mobile really homes in on the universally accessible piece, which is answering questions like, what information do you need when you're not at your desk or when you're not tethered to your DSL or cable connection? What device will you use to access it? What are the input or output constraints on that device? And how can we improve and tailor our services for that environment?

So you've seen us launch some really cool mapping stuff with Google Mobile Maps, which embeds local search, traffic and driving directions into a mapping format that is really accessible on a mobile device. And I think it's been shown to be a pretty valuable service in that context. So we will continue to pursue that strategy.

The universally accessible part also means that we are trying to do what we can to remove obstacles that are standing in the way of making the Internet available to the largest number of people possible. The technology is there to make the Internet available to everyone today. But for various reasons, whether commercial or political, it hasn't happened yet. We are trying to look one by one at those obstacles to see where we can have an impact to make the Internet available to everyone.