Peace hath her victories
No less renown'd than war.
-- From John Milton, "To the Lord General Cromwell"
Now that the much-ballyhooed FCC auction on former broadcast TV airwaves is over, it's time to take a step back and see who won. To nobody's surprise, the biggest potential winner spent the least time on the battlefield: Google (Nasdaq: GOOG).
But Google didn't win anything!
The online giant bowed out of the proceedings after ensuring that the $4.6 billion reserve price would be met on a highly coveted 22 MHz block of radio-spectrum slices. Verizon Wireless, the Verizon (NYSE: VZ) and Vodafone (NYSE: VOD) joint venture, ended up paying $9.6 billion for that ethereal estate, and AT&T (NYSE: T) shelled out $6.6 billion for a svelte 12-MHz nationwide range.
Google had been lobbying to decorate Verizon's 22-MHz slice with some restrictions on how the property could be used. With the minimum price met, Verizon is now bound to a modicum of open access rules, so that any mobile device will be allowed to connect to the network, with any software the user wants. It's a big change from today's wireless networks, where the service provider locks its network down to specific phone models and won't allow third-party applications to talk to the network.
Turning a new leaf
The new Verizon network will look a bit more like the Internet we've come to know and love, thanks to its lack of such arbitrary restrictions. You still won't necessarily be able to connect an AT&T Wireless phone to the Verizon airspace, but moving an Apple (Nasdaq: AAPL) iPhone 2.0 over to a Verizon plan should be easy enough, if the gadget knows how to communicate on the appropriate wavelength.
More to the point, you won't need to wait for Verizon to start selling its own phones for C-block access. Theoretically, it should be as simple as walking up to a random street vendor, buying a generic Google Android phone, and then signing up for a Verizon plan.
Think of how you're free to hook a Sony (NYSE: SNE) handset up to the phone jacks in your house, whether the service provider likes the brand or not. More to the point, Verizon won't tell you what computer brand to use if you want a DSL line, or what software you should run on it.
And the real winner is ... you!
The more our mobile gadgets behave like the Internet, the happier Google is. The Android platform may feel far away today, but I think we'll be overrun with the things next year. Then we'll get similarly application-agnostic versions of the Nokia (NYSE: NOK) software, and Apple will follow suit as well. Eventually, the free market will force all the handset platforms to open up, along with all the networks. Otherwise, AT&T and the rest would see an inexorable exodus of customers from their restricted networks and devices to more open services elsewhere.
For the telecoms, this is a call to action and innovation. When consumers have a choice of services, they'll go to the best provider, or maybe to the one with the biggest marketing budget. We'll see who chooses the brand-building path, and who goes with technical excellence instead. I think the latter road leads to the greater rewards.
It's a beautiful thing for consumers, and it's great for an entity like Google that wants to hawk its online properties to the widest audience possible. Android isn't even the point -- open access is.
By bidding just enough to force a massive sea change, and then not actually buying anything, Google got exactly what it wanted, at almost no cost. I wouldn't be surprised if that was the plan all along.
Peace hath her victories, indeed.
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