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Google Fear Hits AT&T Square In The Jaw

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As predictable as daylight, AT&T isn’t happy about Google’s plan to bid on the 700MHz wireless spectrum. The telecommunications giant is poised to claw any competition out of the equation, and is hoping its traditional ally, the FCC, will have its back again.

But the nitty gritty of it is, the telecommunications industry is scared to death of Google.

A quick review:

AT&T, Verizon, and others are chomping at the bit to get a hold of the 700 MHz band, soon to be returned to the federal government by broadcast television once regulation takes effect requiring them to go digital. This swath of spectrum is ideal for wireless broadband and mobile phone networks.

But to get the most of profit from it, incumbent telecom providers must pressure the FCC to not impose requirements on how the spectrum is used. Rather, incumbents would prefer a setup similar to what they have now, with little incentive to give consumers choice in wireless services.

They do this by limiting devices that can be used on their networks, what third-party applications can be installed, exclusive contracting like with the iPhone, and punitive contract termination fees.

And they want it to stay that way.

Google, though, and consumers, and pretty much everybody that’s not an incumbent, want a section of the spectrum reserved with requirements that are more consumer friendly. Though incumbents have argued that doing so would devalue the spectrum and limit competition, the intent is just the opposite, to foster new players in the arena, and by default, putting pressure on incumbents to think more about customers and less about the bottom line.

Enter Google, the white knight (yes, I’m editorializing, it’s what I do best), who last Friday sent a letter to the FCC promising to bid at least the minimum reserve the agency had in mind for that slice of spectrum, $4.6 billion, but only if the FCC enforce four principles of open access.

This does three things: ensures new, consumer-friendly competition; takes away arguments against from incumbents; and really ticks AT&T off.

Okay, that wasn’t as quick as I thought it was going to be.

What AT&T has to say about it:

Om Malik gets credit for chasing down this statement from AT&T Senior VP Jim Cicconi:

…Google has now delivered an all or nothing ultimatum to the U.S. Government, insisting that every single one of their conditions “must” be met or they will not participate in the spectrum auction. Google is demanding the Government stack the deck in its favor, limit competing bids, and effectively force wireless carriers to alter their business models to Google’s liking…

He also said something to the effect that Google should "put up or shut up," which comes across as belligerent, whiney, immature, and ultimately, threatened. He is right that Google is making demands. He is also right that Google couldn’t win the auction in a fair fight with the telecoms (nor could anyone else, save Microsoft).

But that’s why supporters of open access are concerned. With about four major providers pooling their resources, they could hoard that valuable spectrum and keep America behind other countries in wireless services indefinitely.

The irony of Cicconi’s statement is breathtaking, even painful, as one might not be able to decide which is the pot and which is the kettle. AT&T has always had the deck stacked in its favor…remember Ma Bell? … and Google’s potential entry into the market has them scared they won’t be able to manipulate the market like they are used to doing.

Cicconi’s words are nothing but saber-rattling, a tantrum, a scared kid crying foul when he knows it was fair.

 

UPDATE: Google responds to Cicconi and AT&T, saying that new rules are necessary to ensure competition as the spectrum auction is already rigged in favor of incumbents.

 

Google Fear Hits AT&T Square In The Jaw
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  • Michael

    I don’t understand…why do you say no company besides Microsoft could win in a fair fight against AT&T? Surely Google has much more cash reserves than any telecommunications company.

    • http://www.scribblewiki.com Simon

      At&T makes a whole lot more money that Google so do all the other communications companies.

    • yuri

      The major part is the cash at hand; but the insider connections has a lot to do with it. Maybe that’s why people mistrust AT&T ever since it’s strangle hold on telecommunications for so many years.

  • http://InfoAge.US D. Tim Clark

    Let’s cut to the chase on this one.

    AT&T and the other telecoms desire to charge web destinations (especially Google) by passing along their (supposed) development of the future Internet. They forget that content rules the day … not commodity telephone circuits.

    Google, on the other hand, has methodically been deploying their own (Google owned) network around the world … bypassing the primary telecom backbone networks (i.e. AT&T etc…). Google has been distributing their data centers all over the globe.

    If Google gets fair access to the wireless spectrum … they can totally bypass the major telecoms (in many locations).

    AT&T knows this; Google knows this; and if consumers knew this … they would demand that the FCC (AT&T’s friends) listen to Google’s points. By the way … Google’s suggestions aren’t about creating an advantage … they are about opening up the spectrum to balanced competition (something that AT&T is not used to).

    Look for AT&T to play very hard ball on this one. They buy their deals in advance … and they own the FCC. How else would they buy BellSouth (in the manner they did). They made promises to get the deal; they got the deal; they somehow forgot what they promised; now they are raping the 9 state BellSouth customer base.

    • pratap

      Mike Litoris, I am sure you have never stepped out of US and used a mobile. The phones in third world are world ahead and none of these restrictions.

  • n2ps

    Not going to take sides on this, cause both sides have their points, but you look pretty bad when you complain about FACTS then provide nothing but open ended questions and innuendo to support your side of the argument.

  • Jack Meof

    Mike, you’re just a cunt. I don’t care how much it costs AT&T or Verizon to do anything. They are making a profit, so shut the hell up about that, you sound like a little girl. So AT&T is afraid of new rules to play by? What right do they have to dictate how the auction to performed, Google can only say what they think how it should be done.

    P.S. If you want to be taken seriously, grow up and use a real name you fag.

    • http://www.rustylime.com Michael

      That’s consistent with the typical juvenile Youtube comments. Oh wait…saying ‘juvenile’ and ‘youtube comments’ is redundant :-)

      Speaking of real names: Jack Meof? Who’s being taken seriously now?

  • mfd

    1) Yes, they do limit the devices on purpose – don’t be naive.

    2) It does take a lot to develop an application, so why should it only be allowed to run on one network/device? Why not let willing third parties take the risk and spend the money developing it?

    3) In almost all cases, if your network security (the mobile network in this case) depends on the security of the end device (the phone/iDevice/etc in this case), the network is already screwed.

    4) If they take a hit on the phones, they should let other companies develop/market/sell them. That is the whole point – I want to be able to use whatever device I want, not be limited to the devices the carrier says I can use and then listen to them complain about how expensive it was for THEM to sell it to me.

    5) If they had good service and were really competitive and innovative, they wouldn’t need contracts to retain customers. The company with the best service/network/whatever/etc would win the customers. You know, they would have to compete with each other based on the products/services/offerings.

    6) No, I don’t think the market is competitive. I think that ATT et al are anti-competitive.

    I feel so sorry for you if you really believe even half the stuff you said…

  • Josh Durham

    I’m not certain if the author’s facts are way off, however, I am absolutely positive that yours are: “No company “limits” devices on purpose.. Hmm, let me take you back to the V710 from Motorola, one of the most innovative phones at the time (at least in the US.), which Verizon Wireless decided to cripple to the point that consumers won a class action suit against the company. How about all the locking of phones that carriers employ? What about using BREW and other proprietary sofware platforms which, in my opinion, limit innovation. I could go on. The important part of the article to take away is that a new player in a quickly advancing industry is never a bad thing. Many MVNOs have come and gone, but the mainstream carriers have adopted their practices to cater to niche markets. This is good for consumers and it will not harm the existing networks.

    You are correct that a lot of money is spent to acquire a customer, and it is important to protect users from viruses. But I’m pretty sure the folks over at Google are capable of developing a safe, reliable network; and it will give users yet another choice in the wireless arena. Frankly, I think it’s about time for a new face in this industry.

  • LP

    I think you have some sort of incentive to respond to this article. Hmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm (GASP) mmmmmmmmmmmmmmmmmm…

    • http://www.eugenef.com Eugene

      hmm.. wonder what the future will be then…

  • Hereinillinois

    I dont like the way you said no company limits devices on purpose. Case in point Razor phone from ATT and a Razor phone from Verizon. Same phone different carriers yet Verizon blocks bluetooth intentionally on their phone. They do this because the phone is only capable of sync with their headsets.

  • Ryan B

    Who is the copy editor? The second paragraph looks like it was written by a 3rd grader

  • http://rackit.gartnerwebdev.com Jerry Gartner

    It’s a natural reaction for these established companies to lash out when an innovator comes along and wants to change things – especially if they have the ear of the powers that be. People start crying “anti-trust” when one company begins to dominate an industry (or several). Google doesn’t give the cut throat vibe that I get from other big business. They seem to be interested in the bigger picture. If you want to read more about Richard Stallman’s freedoms and how Google is pushing his agenda to the forefront, have a look at http://rackit.gartnerwebdev.com/2007/07/21/the-google-manifesto-and-richard-stallman/

  • http://blog.smithandengels.com/ Milton Friedman

    Its nice to see Google compete for this spectrum. If there is one thing free markets have proven, its that competition benefits everyone much more effectively then when power is consolidated into just a few.

  • Magamus

    I understand that the wireless industry is competitive, but if you think that the wireless providers in America are not limiting the available devices for customers on purpose you are out of your mind. That is what creates the bottom line for them! By keeping things on an even keel, and only very slowly running out new updates and good services, they are slowly bleeding your wallet dry. This is proven by the fact that wireless providers in Asia offer more for just about the same price or less (they get video and live tv in Japan and Korea for almost 2 years now). The technology is there, but the current wireless carriers know that if they limit us they can get more in the end. If Google wins the bidding and gets their open demands, they would most likely bring in the tech from Asia and sell it immediately, forcing the other carriers to spend the same amount of money as Google is planning (to update their own service/tech) to keep their customers.

    Just because the market is competitive doesn’t mean the market isn’t out to screw the consumer.

  • Nick

    Hmmm…Mike, seems that you are the one with an incentive here, talk about a verbatim rehash of what AT&T might say in defense of their position. Do you work for one of the wireless carriers? The fact is AT&T, Verizon, Sprint etc… have held back the US cell phone industry in comparison to the innovations coming out of Europe and Asia while stiffing the consumer. It is about time other companies entered the market and broke the existing carriers stranglehold on the American cell phone consumer. All power to Goggle and any other company willing to take them on.

  • Joe Riggs

    Hay douche bag, how long have you worked for AT&T? You’re exaclty the type of douche that I hope google will crush.

  • http://www.osgfx.com scottadie

    If Google were to win the bid for the 700MHz wireless spectrum and maintain their principal of an open broadband at the end of it all then I say, GO GOOGLE.
    AT&T, VERIZON, SBC and the other incumbents would no longer be able to hold a knife to our throats to maintain services with them. I’m really kind of sick of the American broadband terrorists death grip on my pocketbook and the wireless service industry.
    If the GOOG lands a punch to their nose we can only hope that the bleeding will be profuse.

  • http://rochpunk.blogspot.com alan macdougall

    Google ought to either bid or not bid, and stop trying to change the rules in the run-up. If they bid and win they can implement all of their desired conditions. They are trying to change the rules to affect the outcome. That may be smart business, but it’s naive to think they are doing it because they have the backs of the consumers.

    They don’t. They want to fill the space with advertising. That may lower costs to consumers, and consumers should have that option, so it’s great if Google moves into the space. As long as the rest of us have the option to pay more and not see adverts, that’s fine with me.

  • Sophie Lees

    Just wanted to say that I really enjoy Jason Lee Miller’s writing.

  • http://www.mynetcan.com George

    This battle for the 700mhz spectrum has gone towards the incumbents from the beginning. The spectrum was originally thought of a new unlicensed spread of spectrum to be used for high speed wireless service. This spectrum would allow for wireless isp’s to over broadband service to customers in rural areas with alot of trees. The spectrum allows for non line of sight coverage. The incumbents with of more money put presure on the fcc to auction it instead of making it unlicensed. I do not see any way this would benefit the public if offered to the incumbents in an auction. If it was allowed unlicensed and open to public use it would be a larger benifit to the public then in the hands of AT&T, Verizon, etc. Its just anoughter way for the goverenment to line there pockets and for the an incumbent to gain alot larger markets share.

  • http://www.google.ca Shrek

    Whatever you read about regarding the FCC or any other Governement involvement .. you know they lie, cheat, steal, cover up, false promise, etc. about anything and everything. Point I am making is that who ever offers the most $$ under the table, will win. BAR NONE! And, by the way, who is the naieve individual who believes otherwise????????

    Yours Truly,

    Disgusted with Politics in General

  • http://sensual-sensations.biz Kiki kranX

    I too think that the auction is rigged to favor incumbents. Will be interesting to see what happens.

  • Daniel Brennan

    The story on Google’s plan to bid on the 700MHz wireless spectrum was onesided. The last thing the consumer needs or wants is Google getting into the wireless business. I think it was just a show Google was putting on anyway. Google made demands that the FCC cannot meet so that Google can use it as an excuse not to bid. Thank God.

  • bal see

    the basic telephone AND telegraph companies have had it their way for far far too long(scores of years).

  • Rich J

    I disagree with your comment about the FCC being a big ally of AT&T. If I remember correctly, the FCC broke up AT&T. They baby bells were all divested from ma bell. Local carriers were granted access to long distance business before AT&T was again allowed to pursue the local business. I don’t know much about the 700MHz wireless spectrum, but I think your comment is very skewed.

    • Jason Lee Miller

      I’m too young to "remember," I was around but paying more attention to Bugs Bunny than the phone company….but to my knowledge, it was the DOJ that ultimately brought down Ma Bell, after 40 years of trying to do something about the government "authorized monopoly" which would seem to me to put the ball squarely in the FCC’s court, that is, they allowed it to exist, implementing rules here and there that Ma Bell didn’t like, you know, like allowing customers to attach answering machines to their phone lines.

      AT&T has innovated a lot and has produced some awesome things…but the company has historically played dirty in terms of business, has continuously looked to block competition, and the FCC has done very little to guard against it.

      The Carterfone decision, the one allowing answering machines, has been brought up in defense of what Google wants in this situation as well…the right to attach any device that does not harm the network…

  • sylvie chen

    When I worked on the task force that broke up the Bell System in the eighties under the Judge Green ruling, the AT&T executive running the group predicted that the breakup would eventually morph back into a single phone company because AT&T had the cash to prevent anyone from changing the rules.

    Sounds like they are still defining the rules.
    Google: rock on!

  • http://wecare.leadsomatic.com marge

    google I am all for you. thnsk

  • http://www.remingtonlaminations.com David Cowart

    What does anyone expect in America? As long as there are LOBBYISTS these “bribery” actions will occur. ATT has once again become the behemoth it once was in the 80′s. I do not think the companies should be allowed to pool their resources to bid on our “infrastructure utlities”. Next thing the public utilities will be doing this. wait oh crap, TXU is already doing this. We are screwed

  • James

    Let Google in. Open up the airspace. CHINA has better cell service. Heck, probably Cuba does as well. It’s like healthcare, the more socialized it is, the more people can benefit, and more people can benefit… I don’t think that’s redundant, is it?

  • http://www.shapeable.com Sean Mitchell

    Good, I’m actually glad someone is railing against the monster that is AT&T. Wasn’t it JUST the other day that thousands upon thousands of people were forced to leave their current cell phone provider so that they could buy and use the iphone.

    I hope we do see more worthy competitors shake up the big established giant. Now the question emerges, who’s going to check the 400lb gorilla that is Google?

    Paging Wang & company at Y!, hellooo out there. Someone?

  • http://www.logotree.com Natalie

    We in North America are already so far behind in technology its disgusting. I bought a phone in Dubai 2 years ago that won’t even be released in North America until 2010…

    We need to get out of the Dark Ages, who rah for open source!

  • barry Conyers

    The bidding on the wireless spectrum should be restricted to those companies that already have a presence in the telecommunications industry. We all know Google’s posture on privacy (once we have th info it is no longer private). Google should NOT be allowed to bid, let alone win the bid.

    • Jason Lee Miller

      I hate to break this to you, Barry, but the EFF is currently suing AT&T for providing a direct funnel to the National Security Agency in order for them to spy on phone calls…even gave them their own secret office at HQ to do it.

      At least Google put on a show when the DOJ subpoenaed their search results and made them get a court order, thereby significantly reducing the amount info they actually gave over…what did MS/AOL/Yahoo do? They bent over for the DOJ, but they didn’t aid and abet the way AT&T did for the NSA.

      If privacy is your argument against Google getting into the telco industry, you might want to pick another one.

      They’re already well-heeled to get in, with all that dark fiber they already own.

  • http://www.parentingateenager.net Christina

    Personally, I hope anyone else but AT&T will win the bid. About 2 years ago, the wonderful wireless AT&T was loosing customers because of their bad customerservice and generally bad attitude towards the consumer.
    Some people might forget, but I am one of these very, very frustrated customers.
    I dread AT&T having any powerful position in the wireless business. I cannot believe that the FCC allowed them to hide behind Cingular, and now AT&T is presenting themselves as the best thing since sliced bread!

    • JeffEveningSide

      Here is my two cents (sence) I am sure that the spectrum has been bought and paid for several times. I think it should be used to create free access.
      EveningSide

  • Mike

    AT&T has more money than it knows what do with. Their buying and selling of companies and divisions is a game for them. When you have such a cash flow, you don’t have to worry if a purchase does well or not, profitability.

  • http://www.AAAHaulAway.CoM Shawn Adams

    AT&T lost all my respect when they outsourced a few years back and layed off a close friend (employee of att for 24 years).

    AT&T needs the competition just like Microsoft needed to have “office” broken away from “windows”.

    My 2 cents.

  • buhlah

    Down with AT&E!

  • yuri

    What a great article to show and explain the reasons for the great rift between AT&E and Google. We, as the consumers, have been ripped off by the likes of MaBell and all its subs for years; never having the ability of finances to challenge questionable actions taken by the FCC in favor of the corporate investors. Now comes a company who is challenging them with the only thing they know, and that with hard cash, and they cry foul. I just hope that Google doesn’t do the Teaburry Shuffle and fall into bed with these telecommunication giants.

  • yuri

    I read your comments “Facts are Way Off” and the way in which you seem to belittle someones understanding of the facts. I honestly think that it may be you who seems to have his head in the clouds; not knowing who the real thieves of the telecommunication industry really are.

  • Larry

    YES I DO

  • Larry

    YES I DO

  • Roger Day

    I like Google … but I think it’s naive to think of them as the white knight in the 700MHz fray. They are as avaricious as any other company (as anybody paying for an AdWords campaign will know) and just as shareholder-value-driven as firms like AT&T. If Google are in that space it’s for Google’s benefit, not the consumer’s. I’m not anti-Google … I just think it’s time to take the rose tinted spectacles off.

  • http://www.ExecutiveSearch.TV Tony Filson

    As a CEO of a broadcasting and media executive firm I have to travel a great deal around the world and deal daily with technology and communication issues that are for global distribution.

    The United States is many years behind some countries we send financial aid to!

    From TV to Interactive to Telco and Wireless the United States is held behind by laws and lobbyists that protect the interests of a few companies over the “rights” of the American people.

    There must be greater competition allowed across multiple media platforms. Academic, Business and Consumer markets all suffer based on America’s loss of technology access and the ability to keep pace with the rest of the world.

    To develop new jobs, new industries and greater productivity in our country and our ability to compete globally we MUST change the current exclusive ownership of the radio spectrum by a few select companies.

    What I

    • Kyle M. Brown

      Could not agree more with this comment. I work for one of the telcos mentioned here but more importantly am a wireless customer.

      I know we are behind other countries, especially Europe with a lot of technologies.

      American businesses need to profit exceeds our desire to be innovative. I think Google is simply setting the stage for what will likely be a huge fight with an Old player in the game. I welcome any new players into the wireless business and think that it could be good for the consumer in the end.

  • http://www.vanax.nl vanax-webdesign

    Google is getting so big, and is buying everything. i hope that it will be google that makes technology possible

    • http://www.vcadirect.nl vca examen

      I hope google wins , their better bigger and know what to do with a small wireless network !

  • http://www.vistavision.nl Vistavision Webdesign

    Google is the one!!! Great article

  • http://forums.usanetwork.com/index.php?showuser=75445 Guest

    Thanks you! your code is very useful & help me a lot … thanks ya…..

  • Guest
  • http://www.swankigifts.com/article/games gaming news

    Great artilce and news jason

  • http://www.q-5.nl Webdesign

    go google! go google!!! :)