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It is old news, really. Google (NASDAQ: GOOG) will be bidding on some of the wireless spectrum to be offered by the FCC in January. Speculation is that it will buy a piece of the regulated airwaves and allow consumers to connect to a large number of devices for little or no charge. The airwaves would be "open." Google would make money from selling advertising on the handsets that access the service. The deal would also drive incumbents like Verizon Wireless and AT&T (NYSE: T) crazy by offering a new model for mobile consumers.
Or, it goes something like that. The media has never been able to exactly pin it down. According to The Wall Street Journal, Google "has said it wants to make mobile networks more open, so that consumers can use any Internet service and application and move their handsets between carriers without onerous restrictions."
It is not clear how Google will make back the billions of dollars it would have to pay for the spectrum. It is also fuzzy how Google would deliver the system. Would it make an investment in expensive wireless infrastructure like cell towers? Would it lease those from a third party? The project is much more expensive than just buying the spectrum.
The whole thing seems to be just as bad an idea as Google getting into the green energy business by investing hundreds of millions of dollars in alternative energy.
Granted, Google does have to diversify beyond its search energy ad base. At some point, that huge growth engine cannot keep expanding at current rates. But how about buying something a little closer to home, like some other media properties? Google wants to supply advertising services to television and newspapers. A media investment appears to make more sense than cell towers and green electric generation.
At some point, Google's track record of never making a significant strategic mistake has to come to an end. The company may be almost there.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
11-30-2007 @ 11:28AM
reinharden said...
I'm not saying that I agree with the move, but I do see lots of ways in which Google could monetize the move.
If you increase the ubiquity of networking, you increase the ability to sell well-targeted ads. If you do nothing more complicated that add in the location of the cell tower as a filter for selling targeted ads, you'd be able to drastically increase the price at which you sell those ads.
It's the old "Show me the 5 closest Chinese restaurants" meme. If someone searches for "Chinese restaurant" on their cell phone, odds are they're really going to buy some. ;-)
Just for fun, let's imagine that Google can place interstitial ads in video streams. Let's also imagine that Google knows where you physically are (isolated by cell phone triangulation oftentimes to within a few meters). Then let's imagine that Google knows what you've previously expressed interest in (via previous search results).
So if you happen to be watching video online over their airwaves, around 11 AM, they can start inserting ads for lunch. ;-)
More tastelessly, when you're in the hospital emergency waiting room, perhaps they'll send you ads for health insurance. ;-)
Like I said, I don't know that it'll work out. But I can see how one might think that it would.
reinharden