March 23, 2008

Google's wireless-auction loss called possible win

Google Inc's losing bid for coveted US wireless airwaves may prove a victory for the Web search leader as it still stands to get access to mobile networks without spending tens of billions of dollars to build one, analysts said on Thursday.

Wall Street analysts said the Silicon Valley Internet search and advertising giant has succeeded in forcing open network requirements upon winning bidder Verizon Communications via Google's apparent strategy of "bidding to lose."

Verizon will control the open network but will be required to allow devices and applications from other companies to use it.

"Google was never in this game to actually build out a telecom network. Their key goal was to open up closed networks," Cowen & Co analyst Jim Friedland said of the control that carriers hold over handsets and services on their networks.

Google's participation in the US government's auction of wireless licenses is credited with helping to drive up the price Verizon paid to win a nationwide wireless license, giving it control of a major piece of the airwaves being vacated by TV broadcasters as they move to digital signals early next year.

Verizon Wireless, a joint venture of Verizon Communications and Vodafone Group Plc, AT&T Inc and Frontier Wireless, a partner of US satellite TV company DISH Network Corp, took the lion's share of new airwaves.
The auctions raised a record $19.12 billion for government coffers.

"By creating a system that is completely open, Google may prevent carriers from using their monopoly position to drive users in a particular way to their services," Friedland said.