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Google Ends Silence On C Block Auction 162

Posted by kdawson
from the bidding-against-ourselves dept.
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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Google Ends Silence On C Block Auction

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  • Smart Move? (Score:5, Interesting)

    by Anonymous Coward on Friday April 04, 2008 @12:28PM (#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 @01:13PM (#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.

        • Re: (Score:2, Insightful)

          by osu-neko (2604)

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

          Yes. However, it should be noted that Google doesn't say that. They say they have a goal of "Do no evil", they have never, to the best of my knowledge, claimed that they never do.

          Of course, that's a point in there favor. It's easier to trust a person who says they try not to sin than one who says they've never sinned. The first assertion is much more believable. The second one is probably lying.

          • It's easier to trust a person who says they try not to sin than one who says they've never sinned. The first assertion is much more believable. The second one is probably lying.

            Well unless we are talking about the devil, shouldn't "try not to do evil" be assumed?

            If someone approached you in real life and said "I try NOT to do evil", wouldn't you feel a little creeped out? I mean why is he TRYING not to do evil?

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

              by PetiePooo (606423) on Friday April 04, 2008 @02:20PM (#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?
              • 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?

                No your not wrong, but you didn't answer the question.

                Does a corporation that purports to doing no evil warrant more scrutiny than any other corporation? The premi

              • 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: (Score:3, Insightful)

          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 hey! (33014) on Friday April 04, 2008 @01:31PM (#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.
      • by Heembo (916647)

        Yup. "Do no Evil" does not mean "Don't screw your opponents".
        That is like saying that American troops shooting at Nazi's during WW2 was evil. Google went to war to help consumers. GOOD WORK, GOOGLE!
    • by SL Baur (19540)

      So they artificially bumped up the price to make AT&T and Verizon have to pay more?
      Haven't you figured out by now that corporations do not pay for things like that, their customers do?

      If in fact their executive board paid for it out of their own pockets, off the books, that would be a most serious violation of accounting standards and the law.
      • Re:Smart Move? (Score:4, Interesting)

        by morgan_greywolf (835522) * on Friday April 04, 2008 @01:37PM (#22965502) Homepage Journal

        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.
        • by imgod2u (812837)
          I'm sorry, but last I checked, exclusive, government-granted right to produce and sell a product that's only given to a limited number of companies was not a free market.
        • Where does that bottom line come from? Revenue from the customers.

          Expenses and outlays of a company ALWAYS come from the customers. A business that does not turn a profit means that it does not cover expenses with funds from the customers. It's also a business that tends to disappear rather quickly, as most people do not like to continually lose money...

      • 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
    • Man... google forced something good to happen (openess in the network). To do so they risked billions of dollars. A side-effect was a bad company (opposed to openess) had to pay more money. And they get called evil over it. Google haters confuse me sometimes
  • by BadAnalogyGuy (945258) <BadAnalogyGuy@gmail.com> on Friday April 04, 2008 @12:31PM (#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]
  • by Van Cutter Romney (973766) <sriram.venkataramaniNO@SPAMgeemail.com> on Friday April 04, 2008 @12:33PM (#22964648)
    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?
    • by Rayonic (462789) on Friday April 04, 2008 @12:57PM (#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
      • Especially since the wireless market has actual, fierce competition

        Competition is actually extremely weak- everyone offers pretty much the same "minutes" and $ for said "minutes". Carriers then make their money on hidden fees and varying out-of-plan airtime charges and such. Among other things, if you go over your minutes, it costs you FORTY FIVE CENTS A MINUTE with AT&T, and that's JUST for AIRTIME!

    • 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

      • In turn, that helped increase the revenues raised for the U.S. Treasury.

        I still find it extremely odd that they would mention this as a "good thing" at all. Seeing as how the number of rounds were not fixed (bidding continued until a round occurred with no increases in bids), the bidding strategy they described was not the best way to obtain their stated goals - they should have placed their first bid at the reserve price and then not bid higher until/unless someone else outbid them. Unless they were bidding themselves up above the reserve because had an unstated goal of running up the price for their competitors.

        It's possible that either the auction rules prohibited you from making large bid increments, or that the bids were anonymous and that if they jumped straight to $4.6b it would be too obvious who they were.

      • Why underbid? (Score:3, Interesting)

        by huckamania (533052)
        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.
    • by Incoherent07 (695470) on Friday April 04, 2008 @01:19PM (#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.
      • by ameoba (173803)
        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.

        Nah... Verizon was just waiting to snipe the auction at the last minute.
    • by edwdig (47888)
      Now, if they pushed Verizon to bid higher to win the contract won't they just charge the end users more?

      You're talking Verizon. Their pricing never is based on cost, only on what they think they can get away with charging.

      My favorite is the random fees on Verizon Wireless bills that go straight to Verizon that get lumped in with the other fees.
    • Re: (Score:2, Interesting)

      by Raineer (1002750)

      Now, if they pushed Verizon to bid higher to win the contract won't they just charge the end users more?
      Myself, I am happy they did it, even if it drives prices up. I'd rather pay more for an open solution than have just another closed one, even if it is C-block. Openness in this space can transform the country.
    • Verizon will charge as much as you are willing to pay. The cost is not a factor in price determination.
  • Implicitly (Score:5, Funny)

    by Rydia (556444) on Friday April 04, 2008 @12:33PM (#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."
    • Re: (Score:3, Funny)

      Google says your mom does donkey shows in Tijuana.
  • by strangeattraction (1058568) on Friday April 04, 2008 @12:35PM (#22964682)
    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 @12:36PM (#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.
      • by daveo0331 (469843) on Friday April 04, 2008 @01:32PM (#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 @12:43PM (#22964780) Homepage
    Don't you get banned from eBay for doing that?
    • Re: (Score:2, Insightful)

      by N1ck0 (803359)

      Don't you get banned from eBay for doing that?
      Government Auction vs eBay. On eBay lying, cheating , and manipulation of the system are banned to protect the consumer. In government auctions they don't give a damn about the consumer; so lying, cheating, and manipulation are the norm.
      • Re:eBay (Score:4, Funny)

        by morgan_greywolf (835522) * on Friday April 04, 2008 @01:44PM (#22965600) Homepage Journal
        OTOH, in government auctions you can't sniped...oh, wait ...

      • by eean (177028)

        Government Auction vs eBay. On eBay lying, cheating , and manipulation of the system are banned to protect the consumer. In government auctions they don't give a damn about the consumer; so lying, cheating, and manipulation are the norm.
        and as a tax payer, I'm glad that they do. As in this case the "consumers" are large multibillion dollar corporations.
  • by troll -1 (956834) on Friday April 04, 2008 @12:48PM (#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.

    • by wcbarksdale (621327) on Friday April 04, 2008 @01:06PM (#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?
    • by Bill_the_Engineer (772575) on Friday April 04, 2008 @01:06PM (#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...

    • by Shishak (12540) on Friday April 04, 2008 @01:09PM (#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:2, Insightful)

        by Kuma-chang (1035190)
        Are you naive enough to believe that if Verizon Wireless paid less for the license they would drop the price to the consumer?

        Precisely. In fact, Verizon's bid was calculated something like this:

        (Predicted revenue from service on the spectrum) - (cost of providing service) - (reasonable return on investment) == maximum spectrum bid.

        They already figured on what consumers were willing to pay for the services they'll sell on this spectrum. If the price of the spectrum went too high for those pricing e
    • 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

    • Yes, they bid the spectrum up to the threshold, but it went far beyond that. Further, they stood to have to make good on their bids. And, of course, they were not the owner of the airwaves, so the bidding can only be though of as foolishness. One should wonder more why the government "allowed" such self-raising bids in their auction - it's never done in a traditional auction format.

      As for yuour concern, it's true that the winners will need to charge more to make back the money, but in reality it's a small f
    • by STrinity (723872)
      No. Because of the openness conditions Google made the FCC include, other companies can use that part of the spectrum and undercut Verizon if they charge too much. But for the openness conditions to go into effect, Google had to run the price up.
       
      Nor are the airwaves "free" -- they're a natural resource that the government claims ownership of. Use of them is rented out under certain conditions, which is how the FCC can get around the First Amendment.
  • by icejai (214906) on Friday April 04, 2008 @01:03PM (#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'"?
    • by dlevitan (132062)
      Well, Verizon has already publicly stated that they will open up their network to any device that passes their network tests (which are theoretically defined as causes no interference and properly talks to our towers). Supposedly it costs a bit of money, but if Google wanted to get their devices approved, it would probably be pretty easy for them.

      The fact of the matter is that Verizon has no serious issue with opening up access because it can save them money. Right now Verizon provides all technical support
  • Not buying it (Score:2, Flamebait)

    by Thai-Pan (414112)
    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.
    • by eean (177028)
      Why else would they push the FCC to add the openness rules? And then out-bid themselves?

      Openness is in Googles self-interest (Android anyone?), I don't see anyone claiming it's out of the goodness of their hearts.
  • Just curious how the Google=Evil crowd feels about this move on google's part? Haven't seen it mentioned so far.
  • And now we see exactly how the US telecom market is designed to push operating costs above a high threshold that only giant corps can afford, to keep anyone but the limited number of incumbent competitors out of the market. Even a rich newcomer like Google finds its only option is to wiggle within the rules to try to force some of those "usual suspects" into throwing some openness crumbs back a the market.
  • Someone's been reading The Art of War :)
  • by jdavidb (449077) * on Friday April 04, 2008 @03:49PM (#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.

    • by aztektum (170569)
      Considering the article about the Census Bureau dumping a few billion into the next census thanks to a botched handheld system they scrapped, the ~4 billion from this auction is pretty much spent. Fuckin Feds
  • This is exactly how I sound when I lose an eBay auction that I really wanted to win. "Ha! I really didn't want that rare comic after all. I was just sticking it to those other suckers that beat me." *whimper*

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