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GOOGLE TO BID FOR U.S. AIRWAVES IF CONDITION ADDED
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| By Peter Kaplan and Sinead Carew
1 hour, 12 minutes ago
WASHINGTON/NEW YORK (Reuters) -
Google Inc (Nasdaq:GOOG - news) said on
Friday it would take part in a major auction of wireless
spectrum airwaves, meeting a minimum required bid of $4.6
billion, if U.S. regulators added a sale condition that Google
said would promote an open wireless market.
The prospect of Google's participation in the auction
escalates the debate over how the valuable airwaves should be
used.
Ten days after Federal Communications Commission Chairman
Kevin Martin floated a proposed set of rules for the auction,
Google said it wants the FCC to require the winning bidder to
offer to resell access to some of the airwaves to competitors
on a wholesale basis.
"When Americans can use the software and handsets of their
choice, over open and competitive networks, they win," Google
Chief Executive Eric Schmidt said in a letter to Martin.
Martin's plan would require support for any wireless device
or software application, but it did not include the so-called
"wholesale" requirement.
"While these all are positive steps, unfortunately the
current draft order falls short of including (all of the)
tailored and enforceable conditions, with meaningful
implementation deadlines, that consumer groups, other
companies, and Google have sought," Schmidt wrote.
Google also called for another provision which would
require other companies to be allowed to interconnect "at any
technically feasible point" with the winning bidder's network.
Schmidt has said an open telecommunications network drives
Internet usage and directly benefits Google's business strategy
of selling advertising over the Internet. Some analysts have
also speculated that Google could have plans to develop and
sell mobile devices.
Google's position is at odds with existing major wireless
carriers that say a requirement to resell the airwaves would
reduce the value of the airwaves.
Google's offer was denounced by most existing wireless
carriers, who accused the company of trying to rig the auction
in its favor.
"This is an attempt to pressure the U.S. government to turn
the auction process on its head by ensuring only a few, if any,
bidders will compete with Google," AT&T Senior Executive Vice
President Jim Cicconi said in a statement.
AT&T (NYSE:T - VZ - news) and Vodafone Group Plc
(VOD.L).
Currently, wireless carriers restrict the models of cell
phones that can be used on their networks and the software that
can be downloaded onto them, such as ring tones, music or Web
browser software.
Martin and the other four FCC commissioners are mulling
different scenarios for how the auction should be conducted
amid intense lobbying by existing wireless carriers, consumer
groups and potential new bidders such as Google.
The airwaves to be sold in the 700-megahertz band are
considered valuable because they can travel long distances and
penetrate thick walls. The auction, to be held later this year,
is seen as the last opportunity for a new player to enter the
wireless market.
Later on Friday, a key House committee announced it had
asked all five FCC commissioners to testify at an oversight
hearing on Tuesday.
In a letter to the FCC, House Energy and Commerce Committee
Chairman John Dingell asked a series of questions about how
Martin's proposed open-access rules would be enforced and
whether they would increase costs to wireless carriers and
consumers.
Google and some consumer advocates have pushed for a list
of open-access conditions for a large piece of the airwaves and
argue that the wholesale requirement should be among them to
promote more competition for wireless service.
A source familiar with Martin's auction plan said the
minimum bid requirement was set at $4.6 billion. If no bidders
met the minimum amount, the auction would be run without the
open-access conditions.
Blair Levin, an analyst with Stifel Nicolaus, said Google's
offer "is a way to take that (money) issue off the table."
"It certainly helps those who are supportive of Google's
position to be able to say the treasury is going to make at
least as much as the treasury thought it was going to make,"
Levin said.
Levin said he did not think there was enough support
currently among the five FCC commissioners to pass the
wholesale requirement sought by Google. But, he said, "The odds
have gone up."
The 700-mHZ airwaves are being returned by broadcasters as
they move from analog to digital signals early in 2009.
The move to bid on the wireless airwaves was overshadowed
on Wall Street by disappointment over Google's second quarter
results, issued Thursday, which were hurt by a costly hiring
spree that saw its shares close Friday down 5.2 percent to
$520.12.
(Additional reporting by Ritsuko Ando in New York)
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