Google to bid for wireless spectrum

Google logoGoogle confirmed its plans to bid for a prized piece of the airwaves in an upcoming government auction, further underscoring the Internet search leader's determination to shake up the wireless market and plumb more profits from mobile phones. Friday's announcement wasn't a bombshell because the Mountain View-based company previously signaled it might participate in the Federal Communications Commission auction scheduled to begin Jan. 24.

In a mild surprise, Google will enter the competition without a partner more experienced in the wireless industry. Going it alone will be expensive and potentially risky, even for a company as rich and technologically adept as Google, which ended September with about $13 billion in cash.

The bidding for the swath of 700 megahertz spectrum that Google wants will start at $4.6 billion, with analysts predicting the final price will be substantially higher. Building out the network for national coverage might cost an additional $5 billion to $7.5 billion, based on estimates from Citigroup Global markets analyst Michael Rollins.

Lingering questions about how the possible wireless expansion might affect Google's finances and focus on its core Internet business threaten to weigh on its stock in the months ahead. The uncertainty could last awhile since the winner of the airwaves auction might not be identified until March.

The airwaves up for grabs are widely coveted because the frequencies travel long distances and easily penetrate walls ??” advantages that will require fewer radio towers while still promising better connections than other wireless networks. The spectrum is being freed up as part of the switch to digital television in February 2009.

Tags: Google, Google+

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