Google cops to puppeting Great American Wireless Auction Google has admitted it toyed with Verizon during The Great American Wireless Auction. Today, the US Federal Communications Commission lifted the gag order it placed on companies that vied for the coveted 700-MHz band, a prime portion of the US airwaves, and the world's largest search engine couldn't help but tell the world …
While Verizon isn't the saintliest of companies, there is something perverse about a company raising its own bid even though nobody was bidding against them.
If you're doing it for open access, then fine. Bid $4.6 billion and stop. Don't chuckle at yourself with a line like " to ensure aggressive bidding on the C Block. In turn, that helped increase the revenues raised for the U.S. Treasury."
So you inflated the bid for no reason other then to force Verizon to pay more, which in turn will show up as a higher cost to me if I chose to be a Verizon customer. That's less ethical than your average politican.
The final two sentences of the article make on sense at all:
"But it's still struggling to reach 3G. As many Jesus Phone owners know a too well. ®"
How would iPhone users know that AT&T is struggling to roll out 3G as the phone doesn't support it!
The only way would be if they had one of the many 3G phones that AT&T are already shipping, it's not AT&T who are having a problem with 3G, it's Apple.
"So [Google] inflated the bid for no reason other then to force Verizon to pay more, which in turn will show up as a higher cost to me if I chose to be a Verizon customer."
That's what you got from this article? Funny, but I got the exact opposite impression. Yes, Verizon is paying more for the C block than Google offered, but Verizon could have easily chosen NOT to bid that much.
No rational company would bid so much that they could not offer either a) competitive pricing, or b) compelling features, or c) both a and b.
So either Verizon made the choice to bid as much as they did because they have a plan which they believe will be competitive (and hopefully compelling as well -- that's where I guess 4G comes in), or because their management is not competent enough to make the right decisions.
Given that Google claims to have had a plan to develop the spectrum (and the fact that they bid amounts above the open access limit suggests that either they did have such a plan or that their management is incompetent -- see above), I see nothing more here than Google having 2 different motivations for bidding on the spectrum, and acting on both of them.
My guess is that Verizon chose to bid as much as they did because it allows them to bring out and fully test their 4G network with no impact on their existing customers and with no messing about with existing equipment. I think if you take those costs into account, Verizon will have no reason to raise prices on anyone except to charge for any additional features. Whether those features are actually compelling to consumers is all that remains to be seen. If they're not, you always have the option of choosing to not be a Verizon customer.
(Besides, even El Reg has tacitly admitted that Google can't be evil. See the Evil Google icon below? No? My point exactly ; )
You say that Verizon paid what they did because they could afford it and they think they can make money on it.
Not sure what side of the pond you are on, but did you hear about the UKs 3G auctions ? The licenses went for far more than anyone thought they would. Not because the telcos thought they would make loads of money, but because they couldn't afford NOT to have a 3G license.
I currently suffer under multiple implementations of networks that don't give much weight to net-neutrality.
So one the one hand, the fact that Google was shilling for Mr. Neutrality and ultimately raised the cost down the line for me (I am a verizon wirless customer using their broadband wireless services), well, what can I say? Not cool Google, not cool.
I am a developer though, and I'm starting to see some of the proprietary influence that non-neutral networks have on code development.
Weighing the two aspects against each other and I'd say that, just personally, I think the neutrality aspect was worth it. So they've done no evil, until...
"In turn, that helped increase the revenues raised for the U.S. Treasury"<===Now that is evil.
True, the iPhone does not have 3G data capability. (generally thought of, in GSM networks, to be HSDPA. The iPhone has EDGE instead.)
But I believe there were 2 primary reasons why this is. The "leaked" reason given by Apple and ATT is battery life. The equally (or more) important reason is most likely the simple fact that ATT HSDPA coverage is very spotty. This is an area where Verizon and Sprint have a big advantage over ATT right now in the USA - better 3G coverage. If the iPhone had HSDPA when it was released, Apple and ATT would have had a lot of unhappy customers who discovered that their spiffy new 3G capability wasn't available very many places.
Hopefully by the time they start marketing an HSDPA-capable iPhone, ATT will have made some progress in that area.
What does the “Jesus Phone” have to do with the AT&T 3G network and its build out? There were quite a few places that have had 3G for awhile now and it is much bigger in Europe. Apple also stated the reason why the iPhone doesn’t have 3G is due to size, not AT&T. For the most part, it is the same chip that handles GSM/GPRS/EDGE will also handle UMTS/HSDPA. Apple didn’t include it for other reason rather than size and it wasn’t AT&T either.
@Chris,
That is part of the game. Verizon Wireless didn’t need to raise their bid, they could have let Google have it. They decided they wanted it more. Verizon has always had a higher cost basis using a technology that was not very popular; IS-95/CDMA, then 1xRTT and then EV-DO. They had the opportunity to bypass EV-DO and go with UMTS/HSPDA and they decided not to. There are more equipment manufacturers for UMTS/HSDPA than EV-DO.
I think if you re-read my comment, you might see that I covered that under the "compelling features" argument -- unless you're actually claiming that UK operators bid so much that they don't believe they'll ever turn a profit on those 3G licenses. Then I'd say I covered that under "incompetent management." I'll explain more in depth if you ask nicely and spell my name correctly ; )
"No rational company would bid so much that they could not offer either a) competitive pricing, or b) compelling features, or c) both a and b."
As Gordon already briefly pointed out, history says otherwise. In the UK, the 3G licence bids were clearly ridiculous; here's how easy it was to see it (if you could do sums).
I don't have the exact numbers with me but around that time I remember being at a lunchtable in Valbonne with some techies and a former cellco marketing person. The lunchtime conversation wandered briefly onto 3G licence costs which were recent headline news, and likely recovery plans.
You start with the money the 3G operators paid for licences (I forget, look it up, it's huge). You pick a period of time to recover the cost of those licences (7 years would normally be generous for a big business investment). You pick a plausible number of 3G customers (averaged over the 7 (or whatever) years, given that initially it's small and later it should be bigger). Obviously several years into 3G in the UK, that number of customers still excludes iPhone users. And 3G coverage isn't exactly universal across the UK. Perhaps that indicates that there is still no compelling "killer app" for 3G; maybe next year, eh chaps? Or maybe the one after that...
The sums: Cost of licence divided by average number of punters, then divided by number of years = ARPU (annual/average revenue per user) just to recover the licence costs. Then add the other costs of running a cellco including the startup costs of a network infrastructure which doesn't yet exist, which aren't exactly small.
It was many hundreds of pounds to be billed per customer year just for the licences, a sum which was demonstrably ridiculous. The techies said "it's not going to happen". The former marketing person said something to the effect of "do you think us cellcos are stupid?". There wasn't really any need for a reply.
Boffin, 'cos you need to be a boffin to do that kind of sums, apparently.
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