Google on Friday revealed that it will compete to buy wireless spectrum in a forthcoming US auction, carrying through on a promise that could give it a big stake in the US mobile industry.
The company hinted that it is likely to offer at least $4.6bn for the most valuable piece of spectrum on offer. However, most observers believe that other recent events have reduced the incentive for it to bid more aggressively, and that Verizon Wireless remains the most likely eventual buyer.
Google's highly unusual decision to reveal its plan comes ahead of Monday's deadline for bidders to file a private notice with the Federal Communications Commission if they want to take part in January's auction of so-called 700 megahertz spectrum. Bidders normally keep their intentions a closely guarded secret and the auction rules forbid any comments from Monday onwards to prevent collusion.
Google said this year that it would take part, provided the FCC forced the winning bidder for the largest of the five blocks of spectrum on offer to operate an "open" network. That would further Google's wider ambition to ensure broad wireless access to its services.
The FCC stopped short of meeting all of Google's requests but adopted the most important ones, which would force the winning bidder to allow any handset and internet application on to its network provided they met certain security standards.
"We believe it's important to put our money where our principles are," Eric Schmidt, Google
The openness requirements were initially attacked by US mobile operators. However, this week Verizon Wireless reversed course, saying that it would next year relax restrictions on the handsets and applications allowed on to its existing network.
"They're taking the [auction] condition and saying they can apply it to their whole network," said Blair Levin, a former FCC chief of staff and now an analyst at Stifel Nicolaus. "The incentive for Google to bid has got less significant."
That might help to explain the timing of Verizon Wireless's surprise move, he and other analysts said, since it made an expensive bidding war less likely.
In a strong hint that Google does not feel it needs to win the auction, Mr Schmidt 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."
If the bids fall short of a reserve price of $4.6bn, the FCC has said it will reauction without conditions.
This unique set of motivations explains why Google is preparing to bid by itself in the auction, rather than as part of a consortium, according to the person familiar with its thinking. Should it win the spectrum, on the other hand, it is likely to bring in other partners to build and operate a network.
