FCC Meets Google Only Halfway

Web Giant Considers Bid for Rights to Provide Local Internet Access

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WASHINGTON (AdAge.com) -- The possibility that Google could join cable and phone companies as a third provider of local internet access seems less likely now that the Federal Communications Commission unveiled a plan to use a government spectrum auction to give consumers more control over choosing their cellphones and wireless carriers.
Google had earlier offered to bid up to $4.6 billion for the wireless spectrum if all conditions it sought from the FCC were included.
Google had earlier offered to bid up to $4.6 billion for the wireless spectrum if all conditions it sought from the FCC were included.

Missing in the FCC's plan for that auction, which commissioners approved yesterday, were two of the four "open access" conditions Google and some consumer groups had sought.

Level of excitement
The possibility of Google as a provider of internet access and not just web searching and e-mail capabilities had added a level of doubt and excitement about the internet's direction, just as phone and cable companies were increasingly seen as the main conduits for online access.

A debate in Congress last year about net neutrality stemmed from worries that phone and cable companies would use their regional exclusivity to favor some internet content over others in rolling out high-speed pipelines, giving some marketers and media owners advantages while potentially making it harder for others to offer competing services.

Google was one of the supporters of net neutrality, and its involvement in the FCC auction was widely seen as an effort to inoculate itself against any attempt by phone and cable companies to act to limit what content is made available to their consumers.

Google had sought four conditions to bid. It wanted the FCC to ensure that consumers could run any program they wanted on their cellphones, effectively barring carriers from "locking" phones. It wanted consumers who buy phones for one carrier to be able to switch the phone's use to another carrier. The FCC approved both of those conditions yesterday.

Two conditions turned down
Google also wanted the FCC to require any carrier buying spectrum to let third parties acquire wireless services needed for new services at wholesale rates. It also wanted the FCC to bar any attempt to limit in which locations third parties can tap a carrier's networks. The FCC didn't approve either of those two conditions.

Google, which had earlier offered to bid up to $4.6 billion for the wireless spectrum if all conditions it sought were included, said it still could bid for some of the spectrum, but Richard Whitt, the search giant's Washington telecom and media counsel, said without the conditions, competing against established companies could be much harder.

He called the FCC's action "real, if incomplete, progress for consumers" in a blog entry, but said in a press conference held by consumer groups that the move could make it harder for Google and other providers to offer direct alternatives to sign up consumers for internet service, forcing them to look to phone software or related services "from the edges."

The two additional conditions Google and consumer groups had wanted would have required phone companies to provide open wholesale access service and open network service to rivals.

Could hamper price competition
Consumer groups praised the FCC for giving consumers more control over their phones, but said the result of its limited action could hamper price competition for internet services and put the U.S. behind other countries.

"The FCC chose to go only halfway," said Gigi Sohn, president and co-founder of Public Knowledge. "It's a tremendous missed opportunity with repercussions for years to come."

FCC commissioners, in approving the conditions, said the agency had gone a long way toward giving consumers more choices and said the agency was risking the government getting less money by imposing any new conditions.

FCC Chairman Kevin J. Martin said his agency's willingness to impose some requirements is an indication the FCC is serving the public interest.

Roger Entner, senior VP-communications sector, IAG Research, said he doesn't think in the short run the FCC vote will mean a lot for consumers, the wireless carriers, Google and mobile marketing. At the moment, wireless carriers heavily subsidize the price a consumer pays for a cellphone, often giving away phones if a consumer agrees to a service contract. Consumers might have the opportunity to buy phones for full price, but he asked, rhetorically, "how many people will spend hundreds of dollars to get around a contract" and buy a phone at full price? For example, in the U.S., the Nokia N95, not available from carriers, sells for $795. In Europe, you can buy it for about $100 with a one-year contract from a carrier.

He said internet publishers, as well as marketers trying to reach a mobile audience, will have as many hurdles as usual, and maybe even a few more as they would have to make their content or ads work on even more handsets likely to flood the marketplace.

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Contributing: Alice Z. Cuneo
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