Monday, July 23, 2007


Google Inc., escalating a battle with AT&T Inc. and Verizon Wireless, may team up with smaller mobile- phone service providers to create its own multibillion-dollar network.

The company, owner of the world's most popular Internet search engine, may bid at least $4.6 billion for wireless airwaves in a federal auction. Rather than use that spectrum to create its own network, Google is more likely to enlist the help of existing carriers, said Chris Sacca, head of special projects.

``We see a lot of companies in this space who we would love to collaborate with,'' Sacca said in an interview on July 20. ``There are a lot of folks who would love to compete.''

Google aims to bring its Internet-search dominance to the mobile-device market, luring consumers and advertising to wireless versions of its software. Partnerships with phone companies may promote Google's technology, a strategy resembling that of chipmaker Intel Corp., which underwrites companies that it expects will help spur semiconductor sales in the long run.

After beating Yahoo! Inc. and Microsoft Corp. in the search industry, Google poses a threat to AT&T and Verizon, said Daniel Briere, chief executive officer of TeleChoice Inc., a consulting and research firm in Mansfield Center, Connecticut.

``Google's got the cash, they've got the reputation on Wall Street and people feel they've got the Midas touch,'' Briere said. ``Anybody that's not afraid of Google would be dumb.'' Google had $12.5 billion in cash and marketable securities as of June 30.

Auction Plan

Google announced a plan last week to bid for a portion of wireless airwaves in a Federal Communications Commission auction. The FCC plans to sell spectrum valued at as much as $15 billion by January.

Sacca didn't say what companies Google was considering as potential partners. He cited Leap Wireless International Inc., which sells the Cricket and Jump services, as an example of a small mobile-phone service that struggles against larger rivals.

Greg Lund, a spokesman for San Diego-based Leap, didn't immediately return a call seeking comment.

Shares of Google fell $7.61 to $512.51 at 4 p.m. New York time in Nasdaq Stock Market trading. They've gained 11 percent this year.

Google wants some of the airwaves in the auction to be sold conditionally. The buyer would have to allow any type of mobile device or software to run on the spectrum. Google also wants the buyer to be required to lease the airwaves to other companies at wholesale rates.

Foster Competition

That will foster a more competitive environment for mobile services, helping consumers along the way, Sacca said. AT&T and Verizon Wireless, the largest U.S. mobile-phone companies, oppose the wholesale-leasing plan. They plan to buy some of the spectrum to expand their high-speed Internet services, which only work with devices and software they approve.

``This is actually preventing the largest number of people who could possibly have access to the Internet from having that access,'' Sacca said.

Fletcher Cook, a spokesman for San Antonio-based AT&T, didn't immediately have a comment. Senior Executive Vice President Jim Cicconi said July 20 Google is trying to ``pressure the U.S. government to turn the auction process on its head.''

Verizon spokesman Jim Gerace didn't respond to a message seeking comment. Executive Vice President Thomas Tauke said July 20 that Google's conditions would cut the value of the airwaves and the government could get ``billions'' more without them.

Intel Connection

A partnership with a phone company would allow Google to have unfettered use of a wireless network without owning and managing it. Intel forged a similar relationship in July 2006 when the world's largest semiconductor maker invested $600 million in Clearwire Corp. to promote a high-speed wireless technology called WiMax.

Intel, whose CEO, Paul Otellini, sits on Google's board, has also funded companies that make so-called wireless-fidelity, or Wi-Fi, networks. The strategy began paying off in 2003 when Intel introduced its Centrino chip package, which helps laptops connect to the networks.

``It's something we've been involved in for years,'' said Kari Aakre, a spokeswoman for Santa Clara, California-based Intel. ``We're not buying spectrum or advocating it, but we want to influence how it gets allocated.''

To contact the reporter on this story: Ari Levy in San Francisco at ; Ian King in San Francisco at

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