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Google concentrate on the mobile networks

Like any big company, Google uses its power and influence to promote policies that will be to its benefit, and in that context it makes perfect sense that the search giant would be weighing in heavily in discussions of wireless communications regulation. In particular, Google said last week that it was prepared to invest at least $4.6 billion (?2.3 billion) in the upcoming auction of new wireless frequencies in the US ? but only if the Federal Communications Commission established rules that would require the new mobile networks to be far more open than the cellular systems of today.

The incumbent cellular companies were quick to dismiss Google's argument as an effort to gain advantage in the auction by imposing on everyone the kind of network design that Google favours. And it probably is that. But in this case Google is also right on the merits, and with luck the company will help to break open a mobile phone industry that has become incredibly consumer unfriendly even as it has become more profitable and ubiquitous.

In the US, unlike in Europe, the mobile networks have largely won the battle with the handset manufacturers over control of both technological evolution in mobile communications and customer relationships. In most cases your phone is tied to your network, and can't be used on another carrier's network. Long-term contracts with hefty cancellation penalties are the norm, and the carrier basically decides (via pricing) when you're going to upgrade your phone.

Even Apple, which had far more leverage than any hardware company has ever had in negotiating with the big wireless players, had to play by a lot of AT&T's rules with the iPhone. Much was made of that fact that Apple retained control of the features and functions of the device (and Apple itself is hardly a champion of open systems), but you still have to sign an onerous two-year contract with AT&T Wireless and you can't use your fiercely expensive handset on any other network.

AT&T, Verizon, Sprint and the rest may eventually rue the day that the iPhone arrived, because it has brought an unwelcome spotlight to the industry's heavy-handed practices at a particularly sensitive moment. When congressmen are complaining about the AT&T contracts even as AT&T is arguing in front of the FCC that no new rules are needed for new wireless networks, well, that's not a good position to be in.

Comically, as Randall Stross pointed out nicely in yesterday's New York Times, the wireless carriers are making the same arguments against open wireless networks as the old AT&T made against open terrestrial networks. We can't allow just anything to be hooked up! It could damage the network! The argument was fallacious then ? witness the incredible array of landline phone equipment from thousands of manufacturers ? and it's equally bogus today.

Google envisions a new kind of mobile network which would be open to an infinite variety of hardware devices and software applications. Obviously this would be to Google's benefit, notably in that it could sell advertising across such a network (it's advertising system, after all, is basically a software application) without having to cut deals and share revenues with a wireless carrier. An open wireless world would benefit Google in that same way that the open internet world has.

I'm wary of Google's growing dominance, but it's hard to argue that the open internet world that has benefited Google has also benefited most consumers and businesses. I'm also wary of arguments over telecom regulation that are cast in moral terms ? one of the things I've learned in 20-plus years of reporting on the telecom industry is that any policy proposal, no matter how outlandish or self-serving, can be cast as altruistic ? but the truth is that some alternatives are better than others.

As a wireless customer, I find the industry's policies and practices highly irritating, and it's been getting worse. As an internet entrepreneur, I see the opportunities that a good "open-systems" approach could represent. The phone companies have a very good record in getting their way with the FCC, but I'm with Google on this one.

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