December 10, 2007

The 700 Club - Minus Two

By Jim Barthold

Comcast and Time Warner Cable have withdrawn from next month's mortgage-the-future bidding war for 700 MHz spectrum, thereby squelching a pretty good theory about how cable operators could blanket their serving areas with WiMAX and deliver an in-franchise mobile wireless play using 700 MHz spectrum.

Ostensibly, the two biggest MSOs pulled out because that multi-billion-dollar swath of spectrum they bought as part of SpectrumCo, along with Cox Communications and (at the time but not now) Sprint Nextel, will cover their mobile needs. Beneath the surface, it's also likely the two cable behemoths, who surprisingly broke stride with Cox on this, didn't want to get into a bidding war with the deep pocketed telcos and their newfound gadfly friend Google.

While it sort of makes sense for Comcast and Time Warner to back away, and it sort of makes sense for Cox to stay in, it's puzzling why Google, which has a lot of money but no networking sense, wants to play at all.

"Who knows what Google will do, but it seems a bit of a stretch for them to want to go and do that," said a vendor source close to the wireless space. "Why would you want to invest in capital-intensive activity that requires quite a lot of technical engineering expertise to build and optimize everything on the network when most walled gardens are coming down quickly and Google can ride on top of other people's networks either for free or strike deals with the networks? It would seem strange to me for them to go out and build a network when they can let people who know how to build networks build the network and then use the air space."

One thing's certain; Google has the billions in pocket change it's going to take to buy the chunks of air that the broadcasters were once given for free.

"They certainly have the resources to do so, but there are probably smarter things they can do," the source said.

- Jim Barthold