Google Fear Hits AT&T Square In The Jaw
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.