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.
