Google is lining up financing to bid on wireless spectrum in the Federal Communication Commission's upcoming 700MHz auction, and it's already built a small high-speed wireless network at its headquarters in Mountain View, Calif., to test out what it could do with the spectrum, the Wall Street Journal reported Friday.
The Journal cited sources saying the company is planning on bidding in the auction, set to take place early next year. Google has obtained a test license from the FCC that it's using to test technology on a small wireless network on its campus, the article said. And it's supposedly using prototypes of handsets that use the company's newly announced Android software.
The Journal's revelation that Google will bid on the spectrum shouldn't come as a huge shock. Google's CEO Eric Schmidt has said before the company would likely bid in the upcoming auction.
After all the fuss and hoopla surrounding Google and the auction, it would seem ridiculous if the company didn't bid. Google lobbied the FCC hard for rules to be passed as part of the auction that would require license winners to allow open devices on that part of their network.
So what happens if Google actually wins some of this spectrum? That's the big question everyone is asking. It could build its own wireless network to compete against other operators like AT&T and Verizon Communications.
But building and operating a network is hard work and very expensive. I've said from the very first time Google was mentioned as a possible bidder in this auction that I don't think it will acquire spectrum to offer consumer wireless service. It just doesn't fit into the company's business model.
Google develops and delivers applications. It makes money via advertising. And all of this can be done without taking on the expense of becoming a wireless operator.
That said, it makes a lot of sense for Google to lease spectrum to other service providers that can put up the cash to build and operate the wireless service. In this scenario, Google maintains control of the asset without having to deal with the maintenance, management and customer service issues of running the network.
If you think about it, this approach makes a lot of sense given how Google has already positioned itself in the wireless market. The Android software was not designed for any single phone developed by a particular handset maker. It also wasn't designed to operate exclusively on a single carrier's network. Instead it is an open software platform that the company hopes will be on hundreds of different cell phone models running on dozens of carrier networks.
So while I know it sounds a lot sexier to think of Google as an alternative to AT&T and Verizon Wireless, I think it's not very likely. Of course, I could be completely wrong. But I was right about the Gphone not really being a phone, and instead being a software platform.