Google set to spend $4.6bn on becoming telecom player if rules suit


Google will move into the telecoms market by spending $4.6 billion (£2.2 billion) on mobile phone spectrum in the United States if certain conditions are met when the airwaves are auctioned. The search company said that it would spend the money if the Federal Communications Commission (FCC) adopted certain rules for the auction process, such as forcing carriers to lease spectrum to others offering services at wholesale rates.

The announcement is the latest in a series of exchanges over proposed changes to the rules on spectrum auctions between mobile carriers such as Verizon and technology companies such as Google. They want to muscle in on the market for providing so-called 4G wireless services.

Google and others want part of the spectrum to be set aside for "open networks" that would be free of the constraints imposed by existing carriers. Many are unwilling to introduce free web calls to mobile phones and want to lock certain phones to particular networks.

The mobile carriers have said that the draft rules are designed to suit Google's business model and would limit their ability to deliver new services. The 700 MHz spectrum, which is due to be auctioned when American TV broadcasts move from analogue to digital, has been the subject of intense interest among technology companies because it is particularly well suited to carrying wireless data. Analysts have estimated that the auction will raise as much $20 billion for the Treasury.

Kevin Martin, the FCC chairman, has indicated that the draft rules respond to many of the concerns raised by a "4G coalition", of which Google is a member. Eric Schmidt, chief executive of Google, has told the FCC that the draft rules fell short of what his and other companies had requested. He called for recipients of a spectrum licence to be obliged to open their platform to all software applications and devices. Licensees should lease spectrum on "reasonably nondiscriminatory, commercial terms", he said.
Mr Martin has said that the draft rules would spur technology companies to introduce new services, such as the ability for mobile phones to route calls via wi-fi. Verizon and other carriers have vigorously opposed any controls on the way they run their networks.

Credits: Jonathan Richards,
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