Rumours resurfaced that Google might be a bidder in the incoming wireless spectrum auction in the US. This spectrum is in the 700 Mhz band, is currently used for analogue TV broadcasting and will become available in the US by 2009 when TV goes all digital. This spectrum is extremely valuable, as its properties enable wide and indoor coverage, so the auction should be quite competitive with the regular mobile (at&t, Sprint, Verizon) and broadband (Comcast, TimeWarner) players leading the pack.
With other alternative players such as Yahoo!, Ebay, DirectTV, Echostar or Intel, Google started its lobbying effort last March. The rationale is pretty simple for Google. In the same way as it managed to get the bulk of the value creation in the fixed broadband value chain, it wants to do the same in the emerging and promising mobile broadband opportunity. Indeed, in fixed broadband, access is fully commoditised and content is not as valuable because of piracy/UGC, unless you can leverage on advertising, i.e. be called Google. For DirecTV and Echostar, there is also a need to be able to get this so valuable and missing return path to remain competitive versus cable and IPTV.
In mobile, the game is quite different as you have to pay to play - i.e. acquiring a license and building a network - so that a Google "parasitic" play is not as easy. Hence its effort to impact the way the game is played, proposed for example real time radio capacity auctions. I don't think - I might be wrong - that Google has any interest in becoming a mobile operator, but it is essential for its success that (mobile) broadband capacity is widely - i.e. cheaply - available and that it can set the rules vs the other players. Hence the big push in the incoming auction. This also assumes that advertising has changed for good and that the Google way of selling advertising will be successful in a sustainable way. Don't get me wrong, I am really impressed by what Google has achieved, but anybody who went through ad cyclical troughs after the bubble bursted or on TV after the first Gulf War will understand why I remain cautious.
This will not remain a US only competitive play, as the analogue switch-off and spectrum refarming will also shortly happen - or are already happening in Europe, thanks to the success of Digital Terrestrial TV (DTT) and DVB-T across markets. Let's see how things will unfold...