The FCC recently held an auction for the 700mhz airwave band that will open once analog cable is fully replaced by digital. The auction was set up into different spectrums for sale, each with different requirements, minimum bids and stipulations. Some required that the channel be open to use for emergency broadcasts while other stipulated that the minimum bid had to reach a certain amount in order to enact an openness policy for the airwave. The latter is where Google, allegedly, cheated and abused the FCC system.
Google’s plan, which they have since admitted to, was to bid the minimum amount needed to make the spectrum open for other users. Thus, Google ensured that no matter who won, the spectrum would be open. The winner turned out not to be Google, but that hasn’t stopped politicians, bloggers and companies alike pointing fingers at Google for ‘gaming’ the system. Never mind that Google would have to pay the $4.6 billion if it had won, and never mind the fact that Verizon ended up winning with a $4.74 billion bid.
Google’s bid was not an attempt at sabotaging the FCC’s system. Rather, it was a carefully and appropriately placed bid that Google no doubt carefully calculated before bidding. If Google had been the highest bidder, the search engine giant would have had to pay up on its $4.6 billion bid, certainly nothing to sneeze at.
If anything, Google has done a favor to the consumers and the FCC itself. If Google forced the bidding up higher, good for them. The FCC goes home with a bit more money than it would have had if Google didn’t place its bid. In addition, Google ensured that this spectrum met the requirements for open access, certainly a good thing in the eyes of consumers.
In the end, it’s really a bunch of politicians pointing fingers and not understanding a simple business practice. Kudos to Google for laughing it off and being open and honest about their bid, a practice in itself that’s leagues ahead of most companies.