Google’s withdrawal from spectrum auction: What it means

Google’s wireless position is half-correctly characterized by Business Week.  Yes, it withdrew from the auction for the C block open spectrum (by all the rumors—it’s not official yet, but NO, it didn’t achieve its strategic objectives either. Google underlined a major vulnerability, which is that it depends utterly on others for access to the customer.

Not only does Google need the Internet, it needs a largely open Internet where it can dodge costs of access and transport and can exploit customer relationships. The problem is that open wireless is very likely not to be a viable business model no matter who has the spectrum. The fact that Google didn’t try to win is almost a complete proof of that.

In wireless, where all capacity is shared in a service area, user behavior interacts to create congestion and poor experiences unless it’s somehow regulated, which is difficult if any device and application can use the spectrum. Google has set up an experiment that it may now hope will never be conducted, because if it is, the results are not likely to be in Google’s favor.