According to the Wall Street Journal, Google is leaning toward being a bidder. In a way, it has little choice. If you're going to engage in an open conversation with the FCC about wireless auction rules it makes sense to bid to keep your goodwill in Washington D.C.
But there are unresolved questions: Will Google bid alone? Will it round up partners? What's the financing look like?
That last question is a joke. Google has cash and if it floated bonds they would be as in demand as its stock. Bond investors rarely get to buy issues from high-tech bellwethers. If bonds from Oracle and Cisco are any indicator Google could raise as much debt as it wanted. Typically, tech titans are debt free so the bond market salivates when these bellwethers raise cash.
The Journal story does a nice job of raising the key issues. Some observations:
- Can Google run its own wireless network? Sure, why not? Yes, wireless networks are complicated but Google would have a key advantage--it wouldn't have legacy applications and equipment to worry about. If you're AT&T and Verizon Wireless you can't just rip out old stuff and replace it with a new network. That's why wireless networks in emerging markets are advanced--they have a greenfield.
- Who is Google going to annoy? The partnership thing shouldn't be overlooked. Google would get flexibility by bidding by itself, but the wireless world is an ecosystem. Partnering with another bidder may make sense even if it's a token gesture. Clearwire was mentioned as a partner, which would make some sense since its Sprint deal is in limbo.
- The spectrum purchase would make sense. Just because Google bids--and possibly wins spectrum--it doesn't necessarily have to use it. A slice of 700 MHz spectrum would be a valuable asset. It could divide the spectrum and lease it, use it as leverage in negotiations with AT&T and Verizon Wireless or create some grand plan for its Android software. The grand plan would probably add up to the long-rumored G-phone.