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Google Case Study

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Submitted By cptriple
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Chris Triplett
Google’s Attempt to Enter the Wireless Market
TM583
4/8/2012

Google’s Intentions to buy into wireless via 700 MHz Spectrum Auction

The Federal Trade Commission (FTC) has mandated that all analog televisions will be converted to all digital television (DTV). By doing so, the 700 MHz frequency range is available and can be used for other purposes. See the diagram below that maps the 700 MHz band. Consumers deserve more competition and innovation than they have in today's wireless world. 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," said Eric Schmidt, Google's CEO. Google got into this auction process at an early stage. Google, in a letter written by CEO Eric Schmidt to the FCC, laid out four conditions so that there would be a level playing field no matter who won at auction. These four conditions were: Open Applications; Open Devices; Open Services, and Open Networks. The auction was held, and Google showed every intention that they would bid for the so called Block C open range. Everyone assumed that it would be Google who would claim Block C. As it turned out, the winner of Block C was Verizon. There were other winners but Google did not win anything.

What Google did was create an environment of interest in the value of the spectrum. It turns out that Google never wanted to win the wireless spectrum; they merely wanted to create an awareness of how important the spectrum is. Verizon has pledged to offer its network for software devices, software and applications not provided by the company. What this means is:

* Any device that can work in the frequency will work with the provider. No more locked devices in that frequency. * Any application can take advantage of the available bandwidth in the open frequency, provided the device is capable of using that frequency. * Any application can be used in the frequency, does not need to be provided by any particular provider. * This open band will facilitate the migration to 4G – meaning higher bandwidth for everybody. * Companies will see a flood of network usage, potentially charging higher fees for better quality service, and an option to put their finger in lot more pies than is possible at the moment.

Google got what it wanted without spending a dime! Google has been a long time provider of mobile applications and services. Their mobile operating system, called Android will be able to use the open spectrum and there are new applications for Android in the works. Android is an open source platform for mobile devices. By staying out of the auction, Google has shown that wireless is not the way to go. TCO A applies to this case in that Google has struggled to apply this core competency to offline media, i.e. magazines, newspapers, and now TV. These types of media lack both the scaling of activity and the natural feedback loop that enables Google to create efficiencies by harnessing these market dynamics. TCO C also applies to this case as Google “levels the long tail” in paying websites to display advertisements from Google. Google uses its page rank search algorithms to harness the collective intelligence of the internet.

References:

http://gigaom.com/2007/03/14/700mhz-explained/

http://googlepublicpolicy.blogspot.com/2007/07/700-mhz-spectrum-auction-where-things.html

http://ubercyber.net/?p=15

http://www.digitaltrends.com/mobile/google-planning-to-bid-on-700mhz-spectrum/

http://www.google.com/intl/en/press/pressrel/20070720_wireless.html

http://googlesystem.blogspot.com/2007/11/google-to-bid-for-700mhz-spectrum.html

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