I Want to Be Free
The current mobile market in the USA is regarded as something of a joke internationally. Features that are standard elsewhere are disabled by networks in order to sell their own proprietary services. The lack of wireless standardization has also lead to much greater difficulty in moving between providers than in the rest of the world (where you just need a new contract, not a new phone).
This is a problem for companies such as Google. Google's business model relies heavily on bandwidth being cheap. Ubiquitous broadband has helped Google a lot, especially since their purchase of YouTube. They depend on their customers having unfettered access to their content. In the wired market, and assuming network neutrality, they have this. The mobile market is much less certain.
Until very recently it was very uncommon to have a mobile device capable of anything close to a desktop browsing experience. The screens were small and the bandwidth was nonexistent. Now, with technologies like UTMS, the bandwidth issue has gone away (although latency remains an issue). The screens are still smaller, but they often have higher resolutions than desktops (225dpi is not unheard of) and more interesting input mechanisms. Mobile devices with 2-400MHz ARM CPUs and 64-128MB of RAM are starting to be relatively common, and these are capable of rendering even quite complicated web pages relatively quickly.
Unlike wired ISPs, however, mobile phone operators are still attached to the business model of selling services rather than access. Things like instant messaging are a direct threat to their business model of selling SMS at exorbitant per-byte rates. Voice over IP upsets their business model of charging according to the distance of the call.
Services like YouTube, similarly, are a direct threat to mobile operators' ability to charge a premium for access to video. When it comes to mobile Internet, a lot of Google products compete directly with services that the network operators wish to provide themselves. It's very difficult to compete for online services when the other player controls both the network and the client device. When Google competes with a company like Yahoo!, the playing field is level. When they compete with MSN, they have to fight against Microsoft's ability to automatically install their software on the majority of desktops. When they compete against a mobile operator, they have to fight against their competitor's ability to throttle or block their service, or simply charge their customers more for using it.
At the moment, mobile Internet users comprise a tiny fraction of the total, but this is likely to change. While devices like the iPhone or Nokia N800 are currently very expensive, they show what's possible with current technology — and in the computing industry it doesn't take long for high-end equipment to become a cheap commodity toy.
In Google's ideal world, mobile network access would have the same commodity status that wired connections currently enjoy. To this end, they issued a public statement that they would bid at the FCC's reserve price if four conditions were met:
- Open applications
- Open devices
- Open services
- Open networks
The first two are aspects of the same requirement; that client devices should not be limited by the service provider, in terms of software or hardware. An end user should be able to use any device they want and install any software on this device. This is the situation that currently exists with wired broadband, where users can connect any computer to the Internet, running any applications.
These first two requirements are often met by existing services. GSM providers often offer SIM-only plans, where the user buys their own device and inserts a SIM card provided by the network. Phones that are not supplied by a network typically allow the user to run a wide variety of software.
Open services and networks are a little more interesting. This would enforce the same requirements on wireless providers that currently exist for a lot of wired telecoms companies; that they make their network available to third parties at a reasonable rate.
In the UK, the telephone network was built by the Post Office and later spun off into a separate company, BT, which was later privatized. To foster competition between ISPs, BT's wholesale group was required to offer other ISPs access to their network at the same rate they offered their own retail department. In a separate program, local loop unbundling, they were required to allow other ISPs to install their own equipment at exchanges and use the "last mile" connections.
Google's last two conditions would place similar restrictions on the wireless networks. There are logical arguments on both sides as to whether this is a good idea. BT's wired network was built either with public money or with government subsidy (the same is true of AT&T's network in the US, which has had similar constraints placed on some of the Baby Bells). Granting a private company exclusive use of public infrastructure doesn't make a lot of sense, and so it's fairly easy to defend the requirement that they share. This is not, however, the case for a new wireless network. No money, public or private, has yet been spent deploying 700MHz towers in the USA, because the spectrum is not yet available.
The counter argument is that the spectrum itself is a public resource. In principle, a competing telecom company could deploy their own wired network. It would be expensive, but the fact that the cable TV companies and some use municipal cooperatives have done so indicates the possibility. A startup could, with some initial investment, deploy a fiber network in a town and then lease external bandwidth. The only time a new wireless ISP can start is immediately after a spectrum auction like the current one, which is not a particularly common occurrence.