Why Google is bidding in the 700MHz wireless spectrum auction

Google is bidding to ensure that the 700MHz wireless spectrum will be open to any application or hardware from any company. The Wall Street Journal confirmed today that Google will indeed bid. Om Malik asks "Will Google Play To Win?"  My guess is no...they will bid $4.6 Billion.

Why $4.6 Billion? The rules of the spectrum auction require the winning bidder to allow any device or application to access the network at "wholesale" rates, provided the winning bid meets the reserve price of $4.6 Billion. Google has already committed to bidding at least $4.6B, so that means the reserve will be met and the open rules will prevail.

Last week I wrote a story explaining what 700MHz spectrum is, and why it is so important to have it open to any company who wants to innovate. As it stands today the major carriers (Verizon, Sprint, T-Mobile) own the spectrum, make the rules, and set the prices. There has been very little innovation in wireless applications because the carriers control the economics.

Wall Street financial analysts were going crazy over the news that Google will bid. They believe Google knows nothing about the business and it will be a huge distraction. The stock (GOOG) dropped sharply by $29.00 from the opening price,  but ended the day down $4.00 at $693.00.

Typical Wall Street. They missed the point entirely. Google isn't in this to win. If they do happen to win, they will probably bring in a Telecom partner to build out the network.

Hats off to Google. The real winners in all of this are consumers who will enjoy more choice and innovation.

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