Apple May Join Google And Bid On Wireless Spectrum - InformationWeek

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Commentary
9/10/2007
09:44 AM
Stephen Wellman
Stephen Wellman
Commentary
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Apple May Join Google And Bid On Wireless Spectrum

I have to admit that 2007 is rapidly shaping up to be one of the most interesting years in the history of the wireless industry. Already we've seen the iPhone, rumors of the Google Phone, carriers (sort of) warming to the conc

I have to admit that 2007 is rapidly shaping up to be one of the most interesting years in the history of the wireless industry. Already we've seen the iPhone, rumors of the Google Phone, carriers (sort of) warming to the concept of open networks, rumors that Yahoo is working on a cell phone, and the possibility that Google may even buy wireless spectrum. Now it looks like Apple also may bid on wireless spectrum.According to a report from BusinessWeek, Apple may join Google and bid on wireless spectrum in an upcoming FCC auction to be held on Jan. 16. Here is a look at this incredibly interesting report:

Two sources tell BusinessWeek that Steve Jobs & Co. have studied the implications of joining the auction, which will be held Jan. 16. The winners will get rights to use the spectrum that analog TV broadcasters are handing back to the government in 2009, given their mandated move to digital television.

Dubbed "beachfront property" by the Federal Communications Commission, it's the last swathe of wireless spectrum likely to become available that would have the attributes necessary for a new mainstream broadband network (BusinessWeek.com, 8/1/07). Signals at the 700-Mhz spectrum, for example, could provide far faster Internet access than today's cellular or even Wi-Fi networks, and the signals can easily pass through buildings and work glitch-free, even in lousy weather.

The analysts, of course, warn that Apple will probably not bid on spectrum, due in large part to the low-margin nature of the business of wireless phone service. While I agree with this argument, I think we need to understand why Apple would even consider this option.

I suspect Apple feels a little burned by its deal with AT&T and with its negotiations with carriers in Europe. Reviews of the iPhone consistently praised the device, but badgered the quality of AT&T's network and service. If there's anything that might make Apple want to get out of the wireless industry, it's the carriers themselves. If Apple really wants the iPhone to be a long-term success, it will need to make sure that its customers have a better experience with Apple's carrier partners. What easier way to make that happen then to own some of the spectrum the carriers need to deliver service to both the iPhone and other devices they serve?

Now I don't think Apple is playing this card -- or even toying with playing this card -- because they believe in open networks or open access. If any company demonstrates the potential for closed, proprietary technology, it's Apple. But, Apple doesn't like to be locked out by other people's proprietary technology or, in this care, controlled by it. And Apple has shown that it will embrace openness when it suits its purposes (i.e., Apple's use of Unix in its own OS and its support for Linux APIs). This possible move could be another example of that thinking.

I also think that Apple, like Google, has no real desire to become a wireless carrier. But, like Google, I think Apple is willing to entertain the nuclear option (i.e. buying spectrum) if it thinks it can use the spectrum to force the wireless carriers to give it what it wants. Apple and Google both stand to gain by forcing the carriers to open their networks. They also stand to gain by making the wireless industry more competitive and by lowering the cost of mobile broadband data service. The more people using 3G at affordable rates, the more money both Apple and Google stand to make.

What do you think? Will Apple actually bid on wireless spectrum? Or will Apple use the threat of buying spectrum as a leverage point with the carrier?

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