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Google Ends Silence On C Block Auction

Posted by kdawson on Fri Apr 04, 2008 11:24 AM
from the bidding-against-ourselves dept.
Businesses Google The Internet
Phurge found a post on the Google Policy Blog in which they lift the cone of silence that had been imposed by regulation over the recently concluded FCC spectrum auction. As some had speculated, Google was in it mainly to force some openness into the wireless industry. "Based on the way that the bidding played out, our participation in the auction helped ensure that the C Block met the reserve price. In fact, in ten of the bidding rounds we actually raised our own bid — even though no one was bidding against us — to ensure aggressive bidding on the C Block. In turn, that helped increase the revenues raised for the US Treasury, while making sure that the openness conditions would be applied to the ultimate licensee."
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[+] Hardware: Google a "Happy Loser" In Spectrum Auction 162 comments
Large cell service providers won almost all of the licenses in the recently concluded FCC spectrum auction. Google didn't get any and won't be entering the wireless business. Verizon Wireless was the big winner, laying out $9.4 billion for enough regional licenses in the "C" block to stitch together nationwide coverage, except for Alaska. On this spectrum Verizon will have to allow subscribers to use any compatible wireless device and run any software application they want. AT&T paid $6.6 billion, Qualcomm picked up a few licenses, and Paul Allen's Vulcan Spectrum LLC won a pair of licenses in the "A" block. One analyst called Google a "happy loser" because it got the openness it had pushed for. The AP's coverage does some more of the numbers.
Submission: Google lifts cone of silence re C block auction by Phurge (1112105)
[+] Mobile: Verizon Reveals Plans For "C Block" Airwaves 54 comments
eldavojohn writes "Now that Verizon has beaten Google in the 'block C' spectrum auction, what are they going to do with it? Well, as of today they've revealed their plans for world domination: they plan to speed up wireless internet connections. It may come as no surprise that they'll also be making this available for other manufacturer's devices. AT&T plans to do the same with their auction winnings, 'AT&T was second to Verizon, winning $6 billion in spectrum licenses, which it also plans to use for high-speed Internet service. But its executives said they didn't bid for the portion subject to the open-access rules. The parts it did land cost AT&T nearly three times as much per unit of spectrum than the portion Verizon bought.'"
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  • Smart Move? (Score:5, Interesting)

    by Anonymous Coward on Friday April 04 2008, @11:28AM (#22964550)
    So they artificially bumped up the price to make AT&T and Verizon have to pay more?

    Very nice!

    • Re: (Score:3, Insightful)

      by _KiTA_ (241027)

      So they artificially bumped up the price to make AT&T and Verizon have to pay more?

      Very nice!
      Yup. "Do no Evil" does not mean "Don't screw your opponents".

      Brilliant!

      • Re:Smart Move? (Score:4, Insightful)

        by Bill_the_Engineer (772575) on Friday April 04 2008, @12:13PM (#22965148)

        Not to slam Google, but would an "evil" corporation actually admit to doing evil?

        Shouldn't we take a closer look at corporations that specifically say, "we do no evil"?

        Sorta like when paper companies create commercials on how earth friendly they are right before a new paper mill is built or when they are under investigation for discharging too much pollution.

        • This is getting a little out of context. When Google started saying "Don't be Evil (TM)" internally, it was pretty obvious to anyone in Silicon Valley what that meant. Don't Be Microsoft. More specifically, don't create artificial lock-in for their platform. And so, they don't. It was probably part of the original corporate philosophy that openness and trustworthiness* would allow them to create a product that (1) would succeed, and (2) a lock-in-obsessed competitor would be inherently unable to match.

          Yahoo

            • Re:Smart Move? (Score:5, Insightful)

              by PetiePooo (606423) on Friday April 04 2008, @01:20PM (#22966092)
              Well unless we are talking about the devil, shouldn't "try not to do evil" be assumed?

              I'd say that's true of individuals (people), but we're talking about corporations here. Corporations are legal entities, but they don't have a conscience. Many corporate boards (dare I say most) use only the law to determine if they should or shouldn't do something. If its not illegal, its fair game. Morals and ethics usually don't factor into their decisions, unless its specifically stated in their bylaws or policies.

              Am I wrong?

              • Re: (Score:3, Interesting)

                by Atario (673917)

                Am I wrong?

                Sadly, you are wrong. Though probably not how you meant.

                Watch The Corporation [imdb.com]. Corporations are legally required to act solely to increase their shareholders' value. You can act morally, but such action must always be overridden by the shareholders' purely monetary interests, in the case of a conflict. This is, of course, technically, almost always the case.

                So, why are you wrong? Because it's not true that morals and ethics usually don't factor in -- they almost never can factor in.

                Whate

      • Re:Smart Move? (Score:5, Insightful)

        by hey! (33014) on Friday April 04 2008, @12:31PM (#22965392) Homepage Journal
        Well, I don't know a lot about the details, but it sounds like the idea is to make the wireless companies bid for the spectrum under the current conditions of sale.

        I'm guessing (without reading TFA of course) that the scenario went like this. If the reserve price hadn't been met, then the carriers could say, "obviously this spectrum has no market value unless it is for creating a closed network." Then the FCC would declare the auction void and conduct a new auction under conditions more favorable to the carriers and less favorable to the public.

        Is stopping that scenario evil? Well, if Google had won, they'd have to put their money where their mouth was and become a wireless carrier themselves. They were hoping the industry would rather let their customers choose the hardware they wanted to use in this spectrum rather than to invite Google in as a competitor.

        So it's a win all around. Google keeps the spectrum open for its servies and for its android partners; users get more choice in hardware and services, and the current providers don't have to worry about Google doing to them what they'd planned to do to Google. It's not as lucrative for the carriers as they hoped, but that's what competition is for. They'll make at least a normal profit, but not as much more as they'd have liked, and the public gets better services.

      • Haven't you figured out by now that corporations do not pay for things like that, their customers do?
        Sort of. That would be 100% correct if corporations could always price their products and services however they wanted. The reality is that they can't really build everything into their pricing structure. In a free market economy, there are other factors such as competition and the law of supply and demand. Some costs do come out of a company's bottom line.

      • Re: (Score:3, Interesting)

        by OpenGLFan (56206)
        Haven't you figured out by now that corporations do not pay for things like that, their customers do?

        This sort of statement always puzzles me -- why do people assume that the price of goods is strongly dependent on the cost to produce them when there's ample evidence that this is false? Shoes cost $2 to make and are sold for $80, etc.

        A company does not think "Oh, we just need to make $x million in profit, and we'll stop there." If a company can produce a widget X at $2, then develops a way to produce it a

  • Android phones coming this year (Score:5, Interesting)

    by BadAnalogyGuy (945258) <BadAnalogyGuy@gmail.com> on Friday April 04 2008, @11:31AM (#22964602)
    The real take away from this press release is that Google is expecting that the first phones based on Android will be released later this year. That is good news for those who are interested in open platforms and enjoy hacking. link [google.com]

    I wonder how happy Verizon's stockholders are going to be when they find out that Google was bidding up the price for essentially no reason at all and Verizon jumped in on top of that. not too bad, it seems [yahoo.com]
      • No, if it was how Google intended it to be used, then that is how Google would have used it that way. Permission or not, it's still being hacked.
        The difference is that Google wants it to be hacked.
      • Depends on your definitions of hacking and cracking. An open design would allow for lots of hacking, but the cracking potential would be a tad stunted.

      • Re:Android phones coming this year (Score:5, Informative)

        by Z34107 (925136) on Friday April 04 2008, @12:36PM (#22965492)

        "Hack" in the common parlance is pretty much "to break (into) something." People who insist on other definitions of hack generally push the word "crack/cracker" to refer to this type of black-hat activity.

        "Hack" in the classic MIT parlance was a nifty programming trick, or maybe just something really clever. Some people refer to awesome pranks as "hacks" (a compliment to the prankster), although normally it refers to some particularly elegant algorithm or code block.

        "Hack" as referring to bad code, as in "hack-job" or "I hacked it together in three hours" is generally called a "kludge" (KLOOJ) by these people.

        Maybe someone who actually went-slash-goes there could help out my amateur etymology.

        • I remember people arguing about the term "hack" 10 years ago. Let's just give up on trying to force correctness in its usage.

          I hacked your mom last night.
        • What about gaining unauthorized access for a non-malicious intent? i.e. jailbreaking the iPhone, making backups of DVDs, disarming a bomb, etc. Seems like in this case you're "fixing" the problem which is the design of the thing itself, so that's a hack. In the case of Android there's nothing to "fix" to open it up, so you're pretty much just developing instead of hacking. (And in software development, that's a good thing. No one likes a hack unless its necessary).
  • From TFA:
    "As you probably know by now, Google didn't pick up any spectrum licenses in the auction. Nonetheless, partly as a result of our bidding, consumers soon should have new freedom to get the most out of their mobile phones and other wireless devices."

    also,

    "But it was clear, then and now, that Verizon Wireless ultimately was motivated to bid higher (and had far more financial incentive to gain the licenses)."

    Now, if they pushed Verizon to bid higher to win the contract won't they just charge the end users more?

    • Re:So how does this work? (Score:4, Informative)

      by Rayonic (462789) on Friday April 04 2008, @11:57AM (#22964976) Homepage Journal

      Now, if they pushed Verizon to bid higher to win the contract won't they just charge the end users more?

      I think spectrum price and end-user price are way too many steps removed to really have a direct effect. Especially since the wireless market has actual, fierce competition

        • Re: (Score:3, Insightful)

          by Kadin2048 (468275)

          How is $80+/month for 2 phones and 500 minute competitive? They pay next to zero for each marginal phone.

          Now if it was $10/phone unlimited, then I could see how you may say it is competitive.

          It's competitive with other carriers.

          Basically the marginal price is more connected to what people will pay for a service, and less what it actually costs to provide that service.

          There isn't enough competition in the wireless market to drive the price down to the marginal cost of delivery, unfortunately.

    • Re: (Score:3, Interesting)

      by pavon (30274)

      Now, if they pushed Verizon to bid higher to win the contract won't they just charge the end users more?

      That was my first thought reading the summary - bidding-up just to raise the final price is not a cool thing to do, and does not benifit citizens/tax-payers/consumers, as it will increase the cost of anything deployed in the C Block, and delay uptake. However ...

      Google's top priority heading into the auction was to make sure that bidding on the so-called "C Block" reached the $4.6 billion reserve price that would trigger the important "open applications" and "open handsets" license conditions. We were also prepared to gain the nationwide C Block licenses at a price somewhat higher than the reserve price ....

      We're glad that we did. Based on the way that the bidding played out, our participation in the auction helped ensure that the C Block met the reserve price. In fact, in ten of the bidding rounds we actually raised our own bid -- even though no one was bidding against us -- to ensure aggressive bidding on the C Block.

      It does sound like they were only bidding up against themselves when the price was below the reserve - but I don't know why they would bid below the reserve to begin with if they were genuinely determined to see the reserve met, and genuinely will

      • Because if they won the nationwide C block, they could enact "open applications" and "open handsets" rules themselves. The government wasn't going to stop them from using their shiny new nationwide C block if their lower bid was the final bid.

    • Re:So how does this work? (Score:4, Insightful)

      by Incoherent07 (695470) on Friday April 04 2008, @12:19PM (#22965210)
      Step 1: Google gets FCC to adopt "openness conditions". These conditions will be dropped if the auction fails to meet the reserve price, so it's in Google's interest to make sure the reserve price is met.

      Step 2: Google bids on the auction, but only until the reserve price is met. This ensures that the openness conditions stick, whether they end up winning the auction or not.

      Step 3: Google stops bidding, and Verizon outbids them. From Google's perspective, they have what they came for, and actually buying the spectrum isn't relevant.

      The confusion is that apparently the auction is sufficiently arcane that Google had to keep the bidding up themselves to get the price above the reserve price (the auction didn't start at the reserve price), but that once it got there Verizon did in fact outbid them.

      • Re: (Score:3, Insightful)

        by edwdig (47888)
        The price that Verizon can charge consumers in the marketplace is not related to the price that they paid for the spectrum. It's a competitive consumer marketplace.

        Most services Verizon offers aren't really in competitive markets. If they were, their costs would be the largest factor in the prices they charge.

        Monopolies and oligopolies are when the price charged for something is independent of the actual cost.

  • Implicitly (Score:5, Funny)

    by Rydia (556444) on Friday April 04 2008, @11:33AM (#22964650)
    Slashdot believes whatever google says; all other corporations lying scum.

    Film at 11.

    • Re: (Score:3, Insightful)

      by lilomar (1072448)
      Well, this is kinda what everyone thought Google was doing, so it's more of a "Google admits to what had been expected." Than a "Big announcement from Google: they do no evil."
    • Google says your mom does donkey shows in Tijuana.
  • Helping pay off the National Debt. What will they take credit for next?

  • Open in theory (Score:3, Interesting)

    by markov_chain (202465) on Friday April 04 2008, @11:36AM (#22964688) Homepage
    It seems logical the telcos will try to hamper the unwanted participants on their network, just like they did with the DSL resellers. Nothing like being the operator.
  • Yeah, I believe the company wants to, and does good things. But let's face it, they're in it to make their shareholders money, not save the world.

    If they can save the world in the process, then good, but they're in it for the buck... and IMO that's the way it should be. I don't want a nanny for a company, I want them to make me shit to play with.

    • Re: (Score:3, Interesting)

      by Hadlock (143607)
      Didn't they specifically make it blindingly clear that by buying google stock you're agreeing that you're in it for the long run? I thought that was the whole point behind the google stock value was that they're looking at the long term and not worrying about short term gains.

      • Re:A little too altruistic (Score:5, Insightful)

        by daveo0331 (469843) on Friday April 04 2008, @12:32PM (#22965410) Homepage Journal
        All companies are theoretically like that, since stock prices are based on the net present value of future dividends. CEOs only started being short sighted when stock options encouraged them to fool the market into overvaluing the shares in the short run, at the expense of the long run value of the company -- but the long run didn't matter since the options would be cashed in long before then. So companies would do things like cut back too far on R&D -- hurting the company in the long run, but boosting short term profits and, because traders were assuming the increased profitability was permanent, boosting the stock price as well. Basically it was a way for CEOs to use their options to scam the shareholders.

      • Re: (Score:3, Insightful)

        by LordKaT (619540)
        What I want to know is: why can't you "do no evil" AND turn a profit? It seems to be a very hard concept for a lot of people to wrap their heads around.

    • Re: (Score:3, Informative)

      by eean (177028)
      They aren't trying to play this off as altruistic. It's obviously in Google's interests to have wireless be more open, so that they can sell their devices to anyone regardless of their phone company. The entry says this.

  • eBay (Score:5, Funny)

    by HaeMaker (221642) on Friday April 04 2008, @11:43AM (#22964780) Homepage
    Don't you get banned from eBay for doing that?

  • Google you just did evil (Score:4, Insightful)

    by troll -1 (956834) on Friday April 04 2008, @11:48AM (#22964852)
    In fact, in ten of the bidding rounds we actually raised our own bid -- even though no one was bidding against us -- to ensure aggressive bidding on the C Block. In turn, that helped increase the revenues raised for the US Treasury ...

    But ultimately the winners are going to have to make their money back by sticking it to the consumer. The bidding system is basically a government tax on something that's free, the airways. So the revenues Google so kindly helped raise for the Feds are ultimately gonna be paid for by the end user.

    • Re:Google you just did evil (Score:4, Interesting)

      by wcbarksdale (621327) on Friday April 04 2008, @12:06PM (#22965080)

      The bidding system is basically a government tax on something that's free, the airways.
      The airways are "free" only in the same sense that natural resources like oil, gold, and lumber are: the government may not have paid anything for them, but they are still in limited supply. Should the government not charge for mining rights on public land?

    • Re:Google you just did evil (Score:4, Insightful)

      by Bill_the_Engineer (772575) on Friday April 04 2008, @12:06PM (#22965084)

      It will be interesting to how this admission of gaming the auction system plays out.

      Verizon could file a complaint.

      -- and/or --

      Google may find itself in hot water, if this admission means that Google violated any federal bidding rules...

    • Re:Google you just did evil (Score:5, Insightful)

      by Shishak (12540) on Friday April 04 2008, @12:09PM (#22965116) Homepage

      But ultimately the winners are going to have to make their money back by sticking it to the consumer. The bidding system is basically a government tax on something that's free, the airways. So the revenues Google so kindly helped raise for the Feds are ultimately gonna be paid for by the end user.
      Are you naive enough to believe that if Verizon Wireless paid less for the license they would drop the price to the consumer? The consumer will be charged, and will pay what the market will bear based on competition. This is not related to the license cost. If Verizon paid too much for the license and they can't make a return on their investment while still being competitive in the market then that is their problem. What Google did was feint competition to keep everyone honest with their bids.

      • Re: (Score:3, Insightful)

        by CodeBuster (516420)

        This is not related to the license cost.

        Exactly. The only way to determine a price that actually works in the marketplace is supply and demand. That is why communism was and is always doomed to fail because it has no functioning price system to direct efficient market activities. The labor theory of value [wikipedia.org], or the notion that the price of a good or service is proportional to the amount of labor or capital that went into producing it, is wrong and the parent is right. Verizon will charge the maximum price that the market is willing to bear no matt

    • Re: (Score:3, Insightful)

      by nine-times (778537)

      That's somewhat true, but not entirely. Pricing is often more complicated than people think. When you buy something, you aren't necessarily being charged cost plus some fixed percentage.

      So to avoid getting theoretical, my point is that Verizon has probably done a calculation already of what price will maximize their profits. So let's say (hypothetically) they can provide service for $10/month and make no profit, or they can charge $200/month and make $190 profit. Why wouldn't they just charge $200/mont

        • Re: (Score:3, Insightful)

          by Qzukk (229616)
          but you can't build a radio tower with happy thoughts and bubblegum.

          Throw in a few dozen metal coathangers and we can get started on construction.

  • I'll believe it when... (Score:5, Interesting)

    by icejai (214906) on Friday April 04 2008, @12:03PM (#22965038)
    ... the winning company actually *implements* the "intended" level of openness and has it in their terms-of-use section in their contracts.

    A popular thing for telecoms to do these days seems to be re-interpreting words in contracts. "Unlimited access" is re-interpreted to mean "Unlimited connection time", even though there are at most 744 hours per month. "Unlimited internet service" is re-interpreted to mean "unlimited, as long as you don't transfer more than XXGB a month". I don't even want to get into what Comcast redefined to get their computer-impersonating policies to fly. Companies are redefining words like it's going out of fashion.

    Google may be cheering and patting each other on back for a job well done, but to be honest, I don't think they've achieved anything they've set out to do. All they've done is get the FCC to say "Oh yeah, and the network must be open to other devices", while everyone nods "M-hm, oh yes of course" while looking at their toes.

    Going so far as telling everyone how clever they were the first opportunity allowed seems a bit premature. The network's not up, the company's services aren't for sale, the consumer-end terms-of-use contracts aren't drafted, so what exactly are they cheering about when they got a telecom company to say "Okay, we'll 'allow' 'open' 'devices' and 'open' 'applications'"?
  • Uhhhhhhh yeah right.

    "Really, we just bid billions of dollars for something we didn't really want out of the goodness of our hearts. Honestly, we didn't even want it, that's the real reason why we didn't win. Really. Come on. I mean it."

    I think Google generally has a lot of good intent, but this claim smells like BS to me.
  • Just curious how the Google=Evil crowd feels about this move on google's part? Haven't seen it mentioned so far.

  • You and I do not share axioms (Score:3, Insightful)

    by jdavidb (449077) * on Friday April 04 2008, @02:49PM (#22967118) Homepage Journal

    In turn, that helped increase the revenues raised for the US Treasury

    I don't consider that a good thing. It won't cause the US government to take less of anybody's money, and it will make it easier for the US government to take actions which I consider wrong.

    • Re: (Score:2, Informative)

      by gladish (982899)
      What it sounds like they are saying is that they had no real interest in purchasing anything, just manipulating the pricing.

      • Re:Interesting (Score:5, Informative)

        by truthsearch (249536) on Friday April 04 2008, @12:01PM (#22965016) Homepage Journal
        They manipulated the pricing to reach a certain threshold. Once it's bought for a certain price the owner of the license must conform to certain rules of "openness" for what can used on that spectrum.

          • Re:Interesting (Score:5, Insightful)

            by Snowmit (704081) on Friday April 04 2008, @01:26PM (#22966180) Homepage
            But they DID want something. There were certain openness requirements that would only happen if the bidding moved past the $4.6 billion threshold.

            In effect Google was saying "we want the block to pass the $4.6 billion mark so badly that we'll pay it ourselves if we need to"

            Once bidding had passed that mark, they didn't really care if they or someone else footed the final bill. The thing they wanted had come true.

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