Google This: 700 MHz Auctions

Where were you, dear readers, on August 20, 2004?  That’s when Google, Inc. went public with an Initial Public Offering of $85 per share.  Three months ago, Google’s share price was over $720.  Now it’s in the absolute doldrums at slightly over $600.  Due in part to its lucky investors, Google is one of the most highly capitalized entities in the world.  And it’s mostly cash.

When you have a lot of money lying around, what do you do with it?  Start exploring space?  (Google is already doing that, actually.)  Why not buy a nationwide slice of valuable spectrum at the FCC’s 700 MHz auction now underway?  The opening bid is $4.6 billion, but that’s small change if Google wants to be a nationwide wireless carrier.

Google Could Change the Way Wireless is Deployed

Google has the intellectual capacity and the institutional culture to do good things.  By avoiding tall structures to deploy their network, at least in urban and suburban areas, they could being the signal closer to their new customers and avoid the controversy that comes with towers.

Google has a philanthropic arm:  Google.org.  They have invested almost $1.5 million in local and urban planning in India.  Some people think towers are a health problem.  Others think towers are a legal problem.  Still others believe it’s neighboring property values.  Kreines & Kreines, Inc. is a wireless planning firm, and we think towers are a local and urban planning problem.

We’re not talking about philanthropy here.  Better deployment practices should be a business decision, even though  such deployment costs more.  Keeping cell sites low will make friends in the neighborhoods.  Creating open deployment means all carriers can use it and pay Google for the service.

Toyota catapulted to the top of the auto industry on the strength, in part, of its hybrids, which are a step forward to a better world.  Google is already at the top of its industry, so it’s logical they would want to do the right thing.  And they would bring the other new carriers with them.

Wait!  Are There Going to be More Carriers With more Cell Sites? 

If you ask CTIA, the Wireless Association, how many “towers” there are in 2008, they may admit to 300,000.  The actual number of cell sites by PlanWireless’ estimate today, is closer to 1,000,000.  There are several reasons for this disparity between what PlanWireless thinks it sees and what CTIA wants us to see:

·       CTIA, the Wireless Association, calls each “tower” a single cell site even if that tower has several cell sites on it.  So a tower, with equipment for four carriers on it, is actually four cell sites by PlanWireless’ estimate and one cell site per CTIA’s estimate. 

·       That would be four cell sites for permitting, revenue sharing, and tax assessment purposes, instead of the one that the wireless industry counts.

·       And then there are stand-alone private cell sites, which don’t exist at all on the local government’s books, but which transmit and receive signals all the same.

As cell sites get small, there will be more sites that local governments don’t know about than they do know about. 

Yes, millions more cell sites to go and we still don’t know how to regulate cell sites and how to generate revenue from those sites for the public sector (unless you have a Wireless Master Plan prepared by Kreines & Kreines, Inc.). 

Why Do We Need Another Carrier?  Aren’t Four National Companies Enough?

Wireless carriers today are stuck in a Madison Avenue jungle of offering “the next big thing” to teenagers.  The love affair young people have with games, TV, music, ring tones, etc. has strayed very far from the original promise to change the world through technology.  Remember the good old days when the tower lawyers would come into a local government office and say “Approve this tower and we will make your life richer, safer, and more convenient?”  Instead, they brought the Simpsons to Springfield.  No wonder neighborhoods rise up and say “no more.  Not in our backyards.  Not in our front yards.  Not in the public right-of-way, either.  There is no redeeming value to approving one more tower.”

But Google could change all that.  They could stroll into a local government meeting and say:

·       “Yes, we’re the new carrier on the block.

·       Yes, we could say approve our tower or we’ll sue you under the Telecommunications Act.

·       Yes, we know one of the advantages of 700 MHz is that you can go high up in the air and transmit/receive for miles and miles.

·       Yes, we could change our name to a lawsuit entity like ‘ABC Partnership’ or ‘XYZ Tower Company’ or use some other subterfuge so you wouldn’t know who’s suing your community.” 

“But we’re Google, and you use us every day.  And we want you to use us everyday while you’re on the move, too.”

And then, instead of fighting with the neighbors over a tower most carriers say they simply must have, Google could say “there is another way.  It’s more expensive for us, but it will win us friends instead of enemies.”

In thousands of public hearings across the U.S., junior reporters will sit awaiting another “NIMBY” battle.  What if Google representatives approach the rostrum to state:

·       “We didn’t buy our strong signal so we could boom it from towers for miles.

·       We bought our strong signals to penetrate the walls of your offices, your studies, your dens and your workrooms.

·       We will place our short poles in your neighborhood far enough removed from any home, yet we will deliver the strongest signal in the neighborhood because we’ll have the only base station in the neighborhood.”

The junior reporters will write their dull stories:  No Controversy!  Google wants to work with its prospective customers, not against them!  And the message will sink in slowly, subtly, like a Google ad rather than a TV commercial that shouts at you.  Before long, people will buy a “G-Phone” and the handset will get great service.

Will Google Have Competition?

Google can’t win all the spectrum at the 700 MHz auction, and there are some who think Google won’t even bid aggressively.  Some say that Google has achieved its true purpose by convincing FCC to require open networks in at least the Upper C Block (either you require it, FCC, or we will do it ourselves to the outrage of the other carriers).  So Google wants everyone to use the networks, regardless of BREW, JAVA or whatever other protocol your particular carrier offers.

So, who else might be bidding:

·       Only three of the four national carriers (Sprint is out, still trying to get together with Nextel).

·       Some regional carriers are in it:  CenturyTel, Cellular South, Cincinnati Bell, Alltel, Leap, MetroPCS, among others.  But these companies are not looking for a national footprint, as Google almost surely would be.

·       And then there are some oddballs, only one of which – Paul Allen/Vulcan – might give Google a financial run for the money.

So the point is this:  unless Google (or maybe Paul Allen/Vulcan) spends the extra money to place cell sites low and carefully in residential areas, local governments are likely to see more of the same deployment issues as they have seen in the past:

·       Big towers, because that’s what the conventional wisdom thinks 700 MHz “needs.”

·       Attachments to existing towers, which means:

-More antennas and weight on the tower.

-No building or zoning permits for the new attachments.

-No additional revenue sharing with most landlords.

-No additional property taxes for the obvious increase in value.

·       Threats of lawsuits if local governments don’t approve new towers.

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Kreines & Kreines, Inc.
58 Paseo Mirasol, Tiburon, CA 94920
Phone: (415) 435-9214
Fax: (415) 435-1522
e-mail: mail@planwireless.com