Friday, August 3, 2007

Why Google Wanted Open Access

If Google's goal is to gain wireless spectrum to be able to provide a connection to people, open access rules are right up its alley.  Google has little interest in the business model of the old telcos.  But, if the licenses are auctioned with the same rules that the old telcos bought them under, they will be very expensive.  Their price will be so high because the old rules allow for the owners to gain oligopoly profits.  If Google had its way, the new licenses would ensure that companies received near competitive market profits - which are very low compared to oligopoly profits.

That means that the licenses would be a lot cheaper for Google to buy.  Think of it this way, if you're Google and you want spectrum, you want it as cheaply as you can get it.  By making it less attractive to others (eliminating the possibility of oligopoly profits), you make it so that others won't bid as much.  Google was trying to reduce the value of the license - reduce it for others in a way that they didn't want to use it.

So, it is still likely that Google will purchase the spectrum.  If they wanted it before, they still want it now.  They'll just be a bit peeved that they have to pay more than they would under the open access rules they wanted.  Remember, the winner of the license can make the spectrum as open as they want.