Can Google change telecommunications?

A few months ago, Google petitioned the FCC to adopt an "open license" scheme, the four components of which were "open applications, open devices, open services, and open networks".

"In short, when Americans can use the software and handsets of their choice, over open and competitive networks, they win," Google CEO Eric Schmidt said in a new letter to the FCC on Friday.

In return for these provisions, Google indicated that they'd be willing to spend up to 4.6 billion to acquire rights over some of the UHF spectrum that will be made available as analog television broadcasting ceases in the United States.

These provisions were strongly opposed by other bidders for the spectrum, which are mostly telecommunications companies who have built a business out of absolute control over the types of services made available. They implied that this might disincline them to bid top dollar for the spectrum. This may or may not have had an effect on the FCC, which chose not to give Google all that they wanted.

I had thought that the issue had been dropped and Google wouldn't bid on the spectrum, but recent statements by Google CEO Eric Schmidt in response to a query by a representative of T-Mobile would suggest that the option still lies on the table.

I'm glad that it is, as Google could change the industry dramatically. A good example of the old way of thinking is that 300 page iPhone bill that recently received a lot of press. Traditional telecommunications companies are accustomed to charging for each communication operation, which for text messaging crazy Justine Ezarik (who apparently sends over 30,000 messages a month) led to a bill that had to be mailed in a box.

Even if AT&T wanted to change that model, they would have difficulty doing so. Their shareholders expect them to price things that way, as it creates profit for the company. Besides, all other telecommunications companies price in the same fashion. Why go through the trouble of changing a lucrative revenue model when nobody is forcing you to do so?

Google, however, is an Internet company that exists in a market accustomed to an "all you can eat" approach to services, many of which are free and ad-funded and open to anyone to provide. More important, Google's investors are accustomed to that market, and aren't likely to expect the company to adhere to the traditional telecommunications approach.

I'm sure Google has a lot of ideas about how to make money in wireless services that haven't occurred to traditional telecommunications companies. I want them to get a chance to try those ideas out, and since only large companies can afford to spend the money to bid on the required spectrum, Google seems as good a candidate as any.

The Internet was supposed to turn telecommunications on its head, and to a certain extent, it has. VoIP is eroding traditional phone company margins, which is why most Americans can make phone calls anywhere in the US without incurring long distance fees (international charges are still high, but they are coming down through competition with VoIP).

Wireless communications, however, is mostly controlled by traditional telecommunications companies that continue to use the same practices that gave them such a bad rap in the past. Not only do they still charge for incremental services, but lock-in techniques are common. Try changing payment plans on any of the major wireless carriers to see what I mean (curse you, Verizon Wireless).

This is largely because wireless telecommunications in America is still a business that is mostly controlled by traditional telecommunications companies. If everyone is doing the same thing, then there doesn't need to be much change.

Google, therefore, could serve as a breath of fresh air into the market, forcing telecommunications companies to change their practices out of a need to compete with Google and its new ideas.

I believe that telecommunications companies and their restrictive practices hold back innovation in the wireless space. Google might offer an opportunity to allow innovation to break free...assuming they manage to win spectrum.  And, once they own spectrum, they can be as open as they want to be.

I'm crossing my fingers.