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The Final Conditions

The FCC accepted the first two of Google's conditions, but not the second two. This means that whoever wins the spectrum auction will be required to allow any (FCC approved) devices, running any software to connect. They will not, however, have to resell the bandwidth wholesale, nor allow other companies to connect to their network at arbitrary points. Apparently even these two constraints were too strict for some. Verizon is now suing the FCC over these conditions, claiming that they will "limit the introduction of new and innovative wireless services." It seems innovative services are only possible when sanctioned by the network.

If the existing mobile telecoms companies win the auctions, then there will likely not be much change to the status quo. The current oligopoly will keep setting high prices. Consumers will be able to connect any device they want to the network, but the price plans will be structured in such a way that it will be (or, at least, appear) much cheaper to get one from the operator at a subsidized price which is locked down.

Will Google buy the spectrum? They certainly have enough spare cash to do so. If they do, it seems unlikely that they would operate the network themselves since it's a long way away from their core business. Instead, they would be likely to sublicense it to other players with the four conditions they originally hoped the FCC would impose.

Doing this would likely be a net win for Google; they would derive some income from the licensing and get the commodity network they want. Since this would be quite bad for most of the existing wireless companies, it seems likely that they will try hard to avoid it happening, even if it means bidding more than they can really afford.

The most interesting outcome would be for a coalition of companies with a vested interest in an open Internet to follow this plan. While Google has the highest profile, they are by no means the only company which has a business model dependent on the existence of such a network. A small group of some of the big players in this area could easily outbid the telcos.

The auction is likely to be a very interesting process. Google and Verizon are already maneuvering in the courts of public opinion and law, respectively. The prize to whomever wins is the ability to choose the direction the development of wireless services will take in the USA. With stakes this high, expect an exciting show.

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