As reported on this blog previously, Google has proposed to the US Federal Communications Commission (FCC) an intention to bid on a conditional basis for the rights to the 700 MHz mobile telephone and data spectrum. This initiative demonstrates a clear indication of a core part of Google’s corporate strategy which is intimately connected with mobile devices connected to the Internet. With Google’s size and market influence, it may be worthwhile revisiting some of the underlying issues behind these strategies to help make sense of these events.

That Google sees the mobile market place as important is evidenced by their development of a mobile-phone friendly internet search application and Google Maps for mobile phones. But these developments are just the tip of the iceberg. Google recently released Google Adsense for mobile devices (note the term mobile devices as opposed to mobile phones) which contextually delivers text based ads to mobile websites. Although only available in a handful of countries, including Australia, it won’t be long before this new money-making initiative from Google will roll out across the globe. Why? According to their own press room, Google is well aware there are more mobile devices in the world than the combined number of televisions and computers. And with people using these mobile devices as a way to source and access information, Google’s strategy to bundle search, mapping, and advertising makes sound business sense.

It is this monetisation model which provides the motivation for Google’s push to have the FCC demand that operators of the 700 MHz spectrum open their devices, applications, networks, and services to ensure maximum competition. Google and other software companies know full well that, to take on the entrenched duopoly of telephone companies and cable operators that dominate access to the Internet in the US, they must get free and open access to maximise their opportunities. The news, therefore, that the FCC granted two of their four wishes, demanding that licensees provide open applications and open devices, would have met with the company’s approval. What this means is that consumers will be free to switch between networks, with little or no switching costs, and they will be allowed to access any desired software application without restrictions from the company through whom they are accessing the Internet.

Undoubtedly, the FCC has played into Google’s hands by insisting on open applications which will give them the company confidence to proceed to the creation of a mobile content search engine. A search engine of this type would seek out mobile ready content and applications – particularly mobile phone ring tones – and with Google being the first point of contact for consumers, the monetisation opportunities this creates for the organisation is immense. Whether Google decides to proceed with a bid for the 700 MHz spectrum, despite the FCC only agreeing to two of their four conditions is yet to be known, but it appears certain that it would be in their interests to do so.

News that Google plans to announce the release of their own mobile telephone handset has Internet columnists scrambling to confirm one of the most talked about events since Apple launched their i-Phone in June last year. As reported by the Sydney Morning Herald, engadget, and CrunchGear, Google will go head-to-head with Apple by producing a touch-screen handset that is rumoured to include a yet-to-be-seen Linux-based Google operating system, a GPS compatible version of Google Maps, and access to Google’s Gmail and calendar applications. To add credibility to the rumours, these news outlets report Google being in advanced stages of negotiation with touch-screen mobile phone manufacturer, HTC, who they claim will manufacture the handsets which will be available for sale at around USD$100 – a fraction of the cost of the rival i-Phone.

This news will no doubt excite many technophiles keen to see newer, faster, cheaper products hit the shopping malls. But for others, this news is indicative of a disturbing trend to the Google innovation juggernaut. Their concerns spring from the manner in which Google is piecing together the jigsaw of a monopoly position on the Internet; particularly in the mobile Internet market place. According to ZDNet, Google has advised the US Federal Communications Commission (FCC) of their intention to lodge a minimum bid of USD $4.6 billion for the acquisition of the 700 MHz mobile phone and data spectrum in the US. With control of the handset, the mobile phone spectrum, and the manner of delivery for much of the content to the consumer, pundits see this a way for Google to own the mine, the railway line, the plant, and the port – the standard recipe for the reduction of competition and higher prices for consumers.

Whilst the fear of Google becoming a predatory monopoly is understandable, it may though be unfounded. Google’s undertaking to make a bid for the 700MHz spectrum was made contingent on the FCC agreeing to impose strict conditions on the granting of any licences. These conditions were aimed at ensuring that applications, devices, services, and networks remained open to all market entrants, thus encouraging and maximising competition. Whilst Google’s rhetoric undoubtedly contains more than a little self-serving grandstanding, their strategy has received the blessing of human rights advocacy organisations who maintain that open digital standards and protocols provide the greatest opportunities for innovation and competition, and therefore greatest benefits to consumers.

It is small wonder therefore that rumours of Google’s foray into the world of telephone hardware is receiving so much attention, and is being greeted at once with so much apprehension and excitement. However, regardless of the accuracy of these rumours, they bring attention to important issues about the neutrality of the Internet, the manner in which legislation shapes and interacts with society’s use of the Internet, and the manner in which large corporations can use their influence to shape the future of this important technology.