As reported today by the WSJ, Google is about to make a serious purchase for a chunk of the wireless spectrum, and they are prepared to bid without any partners. Well, why would they need one anyway? They have boatloads of cash that they’re using for their estimated $4.6 billion bid. In fact, they’ve already set up an advanced wireless network under a test license from the FCC. The FCC deadline to declare an intent to bid is December 3rd, and all the major telecom companies are eyeing Google closely.
From the WSJ:
“The behind-the-scenes moves illustrate just how serious the Internet giant is about trying to reshape the wireless world. Its push could potentially expand the availability and decrease the cost of high-speed mobile Internet access to consumers and broaden the wireless applications they can use.”
“The company has said it wants to make mobile networks more open, so that consumers can use any Internet service and application and move their handsets between carriers without onerous restrictions. That’s one impetus behind the Android software for mobile phones that Google announced Nov. 5, alongside a group of industry partners including Taiwan’s HTC Corp., a handset maker, and Deutsche Telekom AG’s T-Mobile, a wireless carrier.”
“Google is focused mainly on bidding on what has been designated as the “C” block, a slice of the 700 megahertz spectrum. It is also considering other blocks of spectrum available as well, though they would provide only regional coverage or come with other limitations. Google has hired game-theory specialists to help plot its auction strategy, say people familiar with the matter.”
“Sean Maloney, an executive vice president at chip maker Intel Corp., argues that the frequencies on auction could hasten the spread of high-speed Internet access to rural areas and others who can’t easily get it. “Seven-hundred megahertz is a national treasure,” he says. The government is expected to turn over use of the spectrum to the winning bidders by early 2009.”
Although Google’s stock has dropped some due to overall market disruption, it’s still a very healthy company with increasing profits. Yahoo has been making some great moves and gaining ground, but Google will undoubtedly remain a top company in search and related advertising. There is a beauty in their strategy with Adwords and Adsense, both which I have written a short paper about but will not cover here due to the scope. Some articles like the one in Newsweek have suggested that if a better search engine comes along, people like the upcoming and fickle Generation Y will switch very quickly. I really don’t see it happening though. Google has huge data centers all around the world so that its services are rendered lighting fast. The algorithm is nearly bulletproof, and Google spiders have indexed more pages than any other search engine in the world. Google has become synonymous with searching the internet. They are doing what Microsoft has done and still continue to do, creating massive consumer lock-in.
“Why Google should invest in Microsoft” – Fortune – October 12, 2007
“So Google’s down? That means BUY” – Fortune – November 16, 2007