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Google's 700MHz Bet

5:15 PM -- Even if Google (Nasdaq: GOOG) does bid on a chunk of the 700MHz C-band wireless spectrum when the Federal Communications Commission (FCC) auctions it off at the end of January 2008 that's no guarantee that the firm will become a standard cellular operator.

The prospect of Google as mobile operator doesn't quite ring true to me. If it wanted to be a straight-up service provider why did Google unveil the Android software platform rather than a G-Phone handset last month?

Instead, the firm's actions all add up to a company much more interested in getting a major stake in the software platforms that will run on next-generation wireless broadband networks rather being a carrier. (See Google Makes Mobile Move.)

That doesn't mean, however, that Google isn't interested in bidding on the spectrum. Here's why:

In his recent Unstrung Insider report, 700MHz Technology Options: Reshaping the U.S. Wireless Market, analyst Gabriel Brown argues that Google "is looking to ensure that the $4.6 billion reserve is met so that the FCC's open access conditions stand." (See The 700MHz Impact.)

These rules would ensure that potential Google users could swap between carriers and load the firm's software onto their devices. Currently, U.S. operators can lock devices and users to specific contracts and keep applications and content largely within their own "walled garden." The new open access rules would end that cycle.

Thus it is Google's interest to ensure that the spectrum is bid up to the reserve price. This doesn't necessarily mean that the firm will end up running a network over that bandwidth. Brown argues that Google would face "an enormous uphill task to build and run a network."

Witness how difficult it is proving for Sprint Corp. (NYSE: S), a well-established cellular carrier, to introduce new nationwide WiMax networking technology and you'll understand some of the challenges that would face Google on entering this field. (See Sprint Reconsiders WiMax Plans.)

I would expect that partner-run Google-branded services are far more likely than the company operating as a standalone provider. — Dan Jones, Site Editor, Unstrung

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