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Original URL: http://www.theregister.co.uk/2008/04/16/lawmakers_ask_if_google_gamed_700mhz_auction/

Google's Great American Wireless Auction 'game' annoys US lawmakers

By Cade Metz in San Francisco
Published Wednesday 16th April 2008 01:49 GMT

Several US lawmakers are annoyed that Google was allowed to "game" the recent 700-MHz wireless auction (http://www.theregister.co.uk/2007/08/22/google_in_probable_bid_for_us_wireless_spectrum/).

Speaking today on Capitol Hill, during a hearing of the House Subcommittee on Telecommunications and the Internet, multiple Congressmen complained that the FCC's auction rules didn't force the world's largest search engine to make a real go at winning the 700-MHz "C Block," a prime portion of the US airwaves.

In auctioning off the coveted C Block, the FCC agreed to attach an open access requirement if bidding reached a $4.6bn reserve price. Google took the auction past this magic threshold without actually winning the spectrum, and the Mountain View outfit has admitted (http://www.theregister.co.uk/2008/04/04/700_mhz_strategies_revealed/) that winning was not its top priority.

"Google's top priority heading into the auction was to make sure that bidding on the so-called 'C Block' reached the $4.6 billion reserve price that would trigger the important 'open applications' and 'open handsets' license conditions," two Google lawyers wrote on The Official Google Rhetoric Blog (http://googleblog.blogspot.com/2008/04/cone-of-silence-finally-lifts-on.html).

Representative Cliff Sterns, a Florida Republican, complained that Google didn't have enough incentive to give the big-name telcos a real run for their money. The C Block eventually went to Verizon, while AT&T won separate swaths of the 700-MHz band.

"The FCC's conditions allowed companies such as Google to free ride rather than seriously challenge a bid to AT&T and Verizon," Sterns said. "I suspect that if Google had been interested in more than just maneuvering within the system, it could have prevailed in the C Block and become a new entree[sic].

"I suppose we can not really blame them for trying to get free access to the spectrum," he continued. "What is more concerning is that even though we knew what they were doing, we let them maneuver this way anyway."

This view was echoed by other Republicans who prefer, shall we say, limited government regulation. This includes John Shimkus, of Illinois, and Fred Upton, of Michigan. "Google, by its own admission, was successful in gaming the system to achieve its goals without having to purchase a spectrum block or build out the network," Upton said.

"Google is one of the richest companies in the country with a market cap of $140bn dollars. That's $40bn more than Verizon. Google was in striking distance of Verizon's winning bid, yet Google never even attempted to top it. Without an open access rules, Google would have had more incentive to win the auction."

Then Shimkus directly confronted the FCC over the issue. "Do you believe Google was simply gaming the system and duping the commission during the auction?" he asked. "I think Google tried to gain [open] access without having to really pay for deployment."

But FCC chair Kevin Martin said he was more than happy with the way things played out. The commission's main objective, he said, was to open the US airwaves to any device and any application. "Our goal, in adopting the openness conditions, was not to prohibit someone else from winning, but to actually [require] whoever won that spectrum to have an open platform."

We're with Martin on this one. If the FCC hadn't established an open access requirement, Verizon would have won the spectrum anyway - whatever its market cap. And it wouldn't have opened the thing up on its own.

Sometimes Google games are a good thing. ®

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