Friday, November 30, 2007

It's official: Google's going to bid on the 700 mhz spectrum. Here's why you should care.

It's not like there was really any doubt that they would, but today the G-men made it official: they're going to try to buy up the highly coveted 700 mhz spectrum the FCC is putting on the auction block come January.

For those of you wondering why the crap you've even read this far, bear with me a little longer and I'll try to break down the (potential) significance of this.

In 2009 every analog TV in the US will cease to work because broadcasters will be required to shift from an analog signal (on the 700 mhz spectrum) to a digital signal. This leaves said spectrum open for the FCC to auction off.

So what?
Without getting into the technical details (mainly because I'm not smart enough to know them myself), this particular frequency has the ability to travel long, long distances (much further than cell phone towers) and can penetrate walls with little problem, as we know from decades of watching TV using rabbit ears.

Think wireless, high-speed Internet everywhere.

This makes wireless/cell phone carriers salivate at the possibilities. They're already charging people an extra 20-50% extra to access the Internet/e-mail from their phones on a slow, crippled network (ever tried to browse the web on a phone, other than the iPhone?) and an extra $60/mo to use the Internet wirelessly from a laptop. Think of what they could offer, and charge for, having ubiquitous wireless broadband coverage!

The catch
The FCC ruled (thanks to much lobbying from Google and others) that whoever owns the spectrum must support "(1) open applications, the right of consumers to download and utilize any software applications or content they desire; and (2) open devices, the right of consumers to utilize their handheld communications device with whatever wireless network they prefer."

Consumers - 1, Big, Bad Wireless Provider - 0

Still not sure why I should care
Google is now going to be bidding on the spectrum (which has a $4.6 billion entrance fee). This is, essentially, making the wireless providers wet themselves because Google appears to be all about giving people the choice to do whatever they want, with whatever equipment they want. Think of this as not having to buy a new phone every time you switched cell phone carriers - any phone would work with any carrier.

And that one phone can run any kind of software you want. You won't be restricted to "T-Zones" from T-Mobile to browse the web, or "V-Cast" from Verizon to watch your TV shows (and the subsequent fees from those carriers).

The real kicker
And what if Google made all that wireless spectrum free to access? Many speculate Google will provide free wi-fi for everyone. You can use any phone or mobile device on it. You can access it, and use as much of it as you want (no 5MB/month limits, for example) without cost.

So if you can use any software on any device with better coverage than your cell phone, can you think of any reason to sign a two-year contract and pay $100 a month to a wireless carrier?

Or how about shelling out $60 a month for DSL or cable Internet?

That's why the big Telcom companies are a bit worried.

But what's Google's motivation?
Google has billions in its coffers because it has become a very effective advertising medium. (I've written about this before.) By offering free WiFi, and providing an easier way to use your phone and search from it, Google will be opening up an entirely new, highly lucrative revenue stream.

Not only are you able to target ads by specific location, but theoretically the number of searches would skyrocket if the Internet is available, for free, everywhere.

What restaurant owner, for example, wouldn't pay for an ad to come up when anybody searches for "restaurant" on their phone, within 10 miles of his business between the hours of 3 and 9pm?

You can't get much more targeted than that.

Thoughts? Am I off my rocker? Did I miss something? Leave word in the comments.

For more reading, see a CNET article here.
Thanks to Engadget for the pic.