Breaking: FCC Confirms that Big Winner in Spectrum Auction is Verizon. So Why Is Google Smiling?

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Shelf swivels in response to lopsided weight

spectrum.jpgThe big winner of the FCC’s $19.6 billion auction of wireless spectrum that ended yesterday is Verizon. That was pretty much everyone’s guess.

At a press conference today, the chairman of the FCC announced that Verizon won six large regional licenses for the most sought-after C-Block of spectrum that will give it a national footprint. It also won 77 smaller licenses in the B-Block. Google did not win any licenses. And AT&T won 227 small licenses, which might be good to fill in areas of coverage where it is currently weak. Satellite TV provider Echostar also won enough licenses to put together a national service,which could expand its ability to offer two-way broadband services. Also, the D-Block reserved for emergency services will be re-auctioned (it didn’t attract the minimum bid).

So it looks like my Mississippi Valley Sneak Attack theory might have been right and it was Verizon that won individual regional licenses instead of taking Google head-on in a bid for the national license (I am still speculating what Google did, but that is what it looks like).

The real winner here is Google precisely because it lost. Google committed to bidding the minimum $4.6 billion that would trigger open device and open application rules that it had lobbied for, but nobody seriously thought it actually wanted to win the auction. Building out and operating a wireless network is a much lower-margin business than search advertising, and even leasing out the spectrum would have been a distraction. But by putting its $4.6 billion on the table early, it was able to dictate the new rules of the game. Rules that Verizon is now stuck with. All Google really wants are broadband wireless networks that cannot discriminate against Google mobile apps or Android phones no matter who operates them.

And what if Google had won? It was never really that risky a move. There are worse places to park your cash than in wireless spectrum, something for which demand is always going up and supply is always going down.

(Photo by Steve Jurvetson)

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