700 MHz Spectrum Auction: Signs Point To A Bid By Google

More Google news today, this nugget coming from the mouthpiece of the company, Eric Schmidt.

Talking in Aspen Colorado at an annual summit held by the Progress and Freedom Foundation, the Google CEO spoke for the principal of free speech and the need to open networks (presumably the wireless variety) to ensure advancement of communications. Oh, and he also made it a point to tell those in attendance that his company would “probably” bid on the 700 MHz spectrum to be auctioned by the FCC, noting that Google was well aware of the public demand for change in the telecommunications industry.

For those who passed off Google’s influence on the FCC as only that, influence, this is no doubt a surprising report. For those who thought GOOG would go all the way and put some of its many billions where its mouth is, this news is a reassuring message that it is one step closer to doing just that.

Ever since first hearing about Google’s desire to have the FCC guaranteed the 700 MHz spectrum remain open, whomever might be the eventual owner of the coveted frequency, I found myself struggling to juggle which of the two possible routes the company would most likely take when the time came to making a final decision.

Google, for several billion dollars, could quite easily grab the prize. It has the cash. Despite being quite a large expense (I don’t believe Google has ever written a check larger than the one made for DoubleClick, which, at $3.1bn, would be surpassed substantially by a $4bn-plus transfer for the wireless spectrum), Google would presumably recoup on the investment within a few years’ time, perhaps less. Perhaps far less.

But does the company need to have the spectrum as its own? $4bn is a significant chunk of change, and, well, if it gets what it wants from the auction (or most of what it wants, anyhow) without spending the money, it no longer has as much an incentive to foot the bill.

Schmidt’s most recent comments at the Aspen summit seem to show that signs are in fact pointing at a bid. The expense is a small one (relatively speaking, considering the company’s current value and cash reserves), and worth striving for, if only to ensure that the company gets to do what it wishes to do with it.

What the company would like to do is quite clear: give itself, as well as third parties, the freedom to develop technological solutions for businesses and consumers alike without having to negotiate with established wireless networks.

It’s able to do so via the PC-based browser. Google feels it should be able to do the same (the Internet is the Internet, after all, whether at the desktop or not) for people on the go.

In the long run, $4bn or so doesn’t seem like a whole lot. Besides, if it wins the auction (that is, if the company indeed places a bid), chances are its stock will rise and effectively negate the initial monetary cost soon after pen is put to paper, so it’s really win-win for Big G no matter which way one looks at it.