Google Inc confirmed its plans to bid for a prized piece of the airwaves in an upcoming government auction, further underscoring the Internet search leader's determination to shake up the wireless market and plumb more profits from mobile phones.
The announcement on Friday was not a bombshell because the Mountain View-based firm previously signaled it might participate in the Federal Communications Commission (FCC) auction scheduled to begin on Jan. 24.
In a mild surprise, Google will enter the competition without a partner more experienced in the wireless industry.
Going it alone will be expensive and potentially risky, even for a company as rich and technologically adept as Google, which ended September with about US$13 billion in cash.
The bidding for the swath of 700-megahertz spectrum that Google wants will start at US$4.6 billion, with analysts predicting the final price will be substantially higher. Building out the network for national coverage might cost an additional US$5 billion to US$7.5 billion, based on estimates from Citigroup Global markets analyst Michael Rollins.
Lingering questions about how the possible wireless expansion might affect Google's finances and focus on its core Internet business threaten to weigh on its stock in the months ahead.
The uncertainty could last awhile since the winner of the airwaves auction might not be identified until March.
Google shares fell US$4 to close at US$693 on Friday.
The airwaves up for grabs are widely coveted because the frequencies travel long distances and easily penetrate walls -- advantages that will require fewer radio towers while still promising better connections than other wireless networks. The spectrum is being freed up as part of the switch to digital television in February 2009.
Whoever wins the rights to the spectrum being eyed by Google must accommodate all types of phones and mobile software. Google lobbied the FCC to adopt "open access," arguing consumers should not be restrained by current market restrictions that limit the kinds of handsets that work on wireless networks.
"We believe it's important to put our money where our principles are," Google chairman Eric Schmidt said. "Consumers deserve more competition and innovation than they have in today's wireless world."
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