Google Wants It All When It Comes To Wireless - InformationWeek

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12:18 PM
Eric Ogren
Eric Ogren

Google Wants It All When It Comes To Wireless

Google put months of speculation to rest today by officially announcing that it will bid in the FCC 700 MHz spectrum auction come January. It might eventually have its own mobile platform, offer all kinds of

Google put months of speculation to rest today by officially announcing that it will bid in the FCC 700 MHz spectrum auction come January. It might eventually have its own mobile platform, offer all kinds of mobile services and have spectrum, but can Google feasibly run its own wireless network?Google has been trying to move mountains of late, and so far it is succeeding. Over the summer it leaned on FCC Chairman Kevin Martin to attach all sorts of provisions to the upcoming spectrum auction. It didn't get all that it wanted, but Martin did eventually add some of the conditions Google sought, such as open access, to portions of the spectrum.

The open access idea has already had far-reaching consequences. Just this week Verizon Wireless altered its handset policies, and will activate non-Verizon phones on its network beginning later next year. It will also allow users to add their own applications to those devices, rather than be limited to the applications and services offered by Verizon. This is a huge change in policy for Verizon, which has hitherto retained tight control over the devices used on its network. Did Google force Verizon's hand here? Only Verizon can answer that.

Earlier this month Google announced its own mobile platform, Android. The platform will operate on as-yet unrealized hardware, and will be open for developers to create applications. It has signed up 30+ wireless players, including handset manufacturers, wireless network operators and software companies as part of the Open Handset Alliance. This is laudable, to be sure, but its success for Google and its partners is far from guaranteed.

Now it is planning to bid on wireless spectrumwith which it could build a wireless network of its very own. Really, Google? To win the spectrum is going to take a minimum of $4.6 billion, and likely far more. That's just to get some licenses, people. Then Google will have to actually go out and invest in the infrastructure necessary to build a network. Each of the major wireless network operators has spent untold billions this year just to update and maintain their existing networks, let alone build them from scratch. For a software and services company to venture out into the real brick-and-mortar world of network infrastructure seems like a big risk.

Then there's the cost to run the network once it can be operated. If the network is eventually created, will Google then become a carrier? If so, it will have to develop a distribution model for handsets, forge different partnerships with OEMs and software writers and of course set up places for people to actually buy handsets. The list goes on and on and on and on. The capital and time investment here will be huge.

Despite how high Google's stock has surged this year, will its stockholders wait out this investment period patiently?

This move makes me recall a lesson I encountered while at business school. There was a period in Boeing's life when it was struggling. It bet the entire company on one new plane. If the plane succeeded, Boeing would live on. If not, Boeing would die. That plane was the 747, and became an instant hit. It saved Boeing's neck. But Boeing wouldn't have won if it hadn't stuck its neck out in the first place.

Google's neck doesn't need saving right now, but building a wireless network of its own represents a similar risk in my eyes. The question is, will the axe fall, or will Google succeed?

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