Google Gaming and the Spectrum Auctions
by Ewan Spence
Back when the UK Telecoms Regulator (Ofcom) was selling the licences for the 3G networks in the Uk, they hired a Game Theorist to maximise their return and get as much of a digital dividend from the telephone companies as they could. This eventually became the UK’s fabled “3G auction†where ten companies (including the four incumbent operators of Vodafone, Orange, T-Mobile and Cellnet) were forced to take part in a sealed envelope auction for five 3G operating licences that would be the next wave of telecoms operations.
By pretty much being forced to bid against each other for air, UK Government with the help of their theorist who created the rules to maximise the money that would be bid, received a windfall of around 22.5 billion pounds. It crippled the operating companies to a large extend, forcing huge cuts in staffing, R&D and infrastructure to pay for it.
All of this came to mind when I saw a post on Moco News that Google has hired their own game theorist for their potential bid on the US auction space coming up. This is a strong sign to the incumbent networks that they’re ready to play ball. Given both the cash reserves of the company, and the recent movement they’ve made into the mobile software space with Android, Google could be as strong an entrant in the US market as Hutchinson’s 3 network in the UK. 3 won the fifth 3g licence in the UK, at a competitive cost and proceeded to make a number of firsts, including the first 3g video mobile service in the UK
With no existing GSM network to maintain, and no devices to market either, the idea of Google working this open spectrum for all could have the same unpredictable effect as the crippling costs and hidden burdens that encumbered the UK and European networks at the start of the 21st century.
What’s the name of the game for Google? That’s a tough one, and victory is not yet assured, especially as I doubt they’ll want to bring on a partner to help fund the bid. But I’m certainly rooting for Google to win the auction, if for no other reason than to see what sort of disruptive effect they will bring to a telecoms market that is coasting on momentum.
