Summary
1. Until now, I was 100% certain the Google, the 600 pound gorilla was going to get the coveted 700 MHz spectrum without any competition. 2. Allen’s entry into the auction should not be dismissed as not important. 3. Allen has been quietly collecting airwaves and this 700 MHz will be a valuable addition.
Analysis
Google is the 600 pound gorilla were expected to win the 700 MhZ auction almost without any contest until now. True, they have limited experience in the wireless world but they have the resources to engage major carriers and provide services.
Google has already been teaming with a wide range of companies using their 'Open Handset Alliance'. Google will supply the Android platform to software suppliers for free. Google are also teaming with operators as this will enable them to expand into areas like the access business and both will benefit from increased revenue from advertising and data access. A third area where analysts say that Google could benefit is in the Value Added services companies but I am not very convinced here.
Allen’s entry into the 700 MHz auction took Google and most of us by surprise. None really expected Allen to be bidding for the spectrum but when you look at it holistically, it is not that far fetched. It kind of makes business sense. The article correctly states that Allen has been amassing the wireless spectrum but in mini-pockets around the country through his Vulcan company.
As most of us are aware, the coveted 700 MHz is a low-frequency variety of spectrum that has the capability of penetrating walls and other obstructions. This is a huge plus to wireless companies where dead spots have become a way of life.
Coming back to Paul Allen and his entering into the bidding, it can only mean one of two things. He is either going to compete with Google head-on-head or enter into an alliance with Google to control the wireless world. This alliance might end up being good for Google to be able to compete with Verizon and AT&T.
Bottom line, I strongly think that an alliance between Allen and Google will be good for both. This spectrum will open up competition in a big way and will be a good investment for the future.
