United States 2008 Wireless Spectrum Auction - Google Involvement

Google Involvement

In an effort to encourage Network neutrality, groups such as Public Knowledge, MoveOn.org, Media Access Project, along with individuals such as Craigslist founder Craig Newmark, and Harvard Law professor Lawrence Lessig appealed to the Federal Communications Commission to make the newly freed airways open access to the public.

Prior to the bidding process, Google asked that the spectrum be free to lease wholesale and the devices operating under the spectrum be open. Currently many providers such as Verizon and AT&T use technological measures to block external applications. In return Google guaranteed a minimum bid of $4.6 billion. Google's specific requests were the adoption of certain policies

• Open applications: Consumers should be able to download and utilize any software applications, content, or services they desire;
• Open devices: Consumers should be able to utilize a handheld communications device with whatever wireless network they prefer;
• Open services: Third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and
• Open networks: Third parties (like internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee's wireless network.

The result of the auction was that Google was outbid by others in the auction, triggering the open platform restrictions Google had asked for without having to actually purchase any licenses. Google was actively involved in the bidding process although it had no intentions of actually winning any licenses. The reason for this was that it could push up the price of the bidding process in order to reach the us$ 4.6B reserve price, therefore triggering the open source restrictions listed above. Had Google not been actively involved in the bidding process, it would have made sense for businesses to suppress their bidding strategies in order to trigger a new auction without the restrictions imposed by Google and the FCC. Google's upfront payment of $287,371,000 in order to participate in the bidding process was largely recovered after the auction since it had not actually purchased any licences. Despite this, Google ended paying interest costs on which resulted in an estimated loss of 13 million dollars.

The FCC ruled in favor of Google's requests. Only two of the four requirements were put in place, open applications and open devices. Google had wanted the purchaser to allow 'rental' of the blocks to different providers.

In retaliation, Verizon filed a lawsuit against the Federal Communications Commission to remove the provisions Google had asked for. Verizon called the rules “arbitrary and capricious, unsupported by substantial evidence and otherwise contrary to law.”