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FCC to Rule on Wireless Auction

Members of the Federal Communications Commission, including Chairman Kevin J. Martin, third from left, were on Capitol Hill on Tuesday to testify at a hearing on the forthcoming auction of the public airwaves. Many in Congress have favored Google's proposal to open up the wireless airwaves to allow consumers wider selection of what features they can receive on their cellphones. (By Carol T. Powers -- Bloomberg News)

The company recently hired Johanna Shelton, formerly on the staff of Rep. John Dingell (D-Mich.), an influential member of the House telecommunications subcommittee. Google also frequently invites prominent politicians to tour its Mountain View, Calif., headquarters. But its 2006 congressional lobbying budget of about $770,000, according to public disclosures, is dwarfed by the $21 million spent by AT&T and $14.4 million spent by Verizon the same year.

Unlike many campaigns that use well-connected lobbyists to persuade members of Congress, Google and its opponents have fought this battle on paper, using their lawyers to make their arguments in filings to the FCC.

Google's clout in the airwaves auction has grown slowly, marked by small victories along the way. In February, it hired Richard S. Whitt, once a lawyer for the now-defunct telephone company MCI, to lead its telecom policy agenda. And Google also harnessed the power of politically savvy public interest groups, consumer advocates and like-minded companies such as eBay and Yahoo to push its idea for an open network.

In late April, FCC Chairman Kevin J. Martin endorsed the general idea. A week later, during a tour of the Googleplex in Silicon Valley, he asked Brin and the other Google co-founder, Larry Page, and chief executive Eric Schmidt to suggest rules for the auction that would increase the chances that a new wireless competitor would emerge.

"I think that was a little victory for us that showed the chairman was willing to meet us in the middle," said Whitt, who has led Google's lobbying operation.

Over the next two months, Google outlined its requirements for the auction with the FCC. Its "alternate access team," run by three wireless engineers, Chris Sacca, Larry Alder and Minnie Ingersoll, swooped into Washington for a series of visits with FCC commissioners. Google has also hired game theorists to strategize for the auction.

In the meetings with the commissioners, Google's team urged them to require the highest bidder in the auction to build a network that would be open not only to devices but also to software and third-party companies. Those conditions would make the airwaves more accessible and, hence, more valuable to Google, but would conceivably damage the business of the wireless companies by no longer allowing them to differentiate their offerings from one another.

Like the culture at many Silicon Valley technology companies, Google's clashed with Washington's. Some FCC staff members said the company's tech gurus came across as arrogant in meetings with commissioners.

"They're used to getting what they want rather than having to make a case for what they want," said one staff member who spoke on the condition of anonymity.

Martin subsequently said he favored requiring the auction winner to use a chunk of the airwaves to build a network open to all mobile devices but stopping short of meeting Google's other demands.

AT&T and Verizon initially blanched at Martin's proposal, arguing it would tip the competitive scales in Google's favor. But in a series of hearings on Capitol Hill, several lawmakers voiced support for using these airwaves to give consumers more choices. Many cited complaints about the fact that Apple's iPhone, recently introduced to great fanfare, can be used only on AT&T's network.

Others said they were concerned that regulating the airwaves would diminish the estimated $15 billion in revenue raised by the auction. AT&T questioned Google's intentions, telling the company to "put up or shut up" in filings with the FCC. To "put our money where our principals are," Whitt said, Google then committed to spending at least $4.6 billion to bid on the airwaves if its conditions were met. AT&T responded by shifting its position to support Martin's open-access proposal.

Martin's plan for an open-access network "would enable the introduction of an alternate wireless business model without requiring changes in the business models of AT&T and others in what is a highly competitive wireless industry," said Jim Cicconi, AT&T's senior vice president of external and legislative affairs, in a recent filing with the FCC.

"It was very surprising that they backed down. . . . Google was getting traction, and I think the major players wanted to be on the winning side of this battle," said Doug Bonner, who heads the communications practice at the law firm Sonnenschein Nath & Rosenthal. "Google's definitely putting their currency to work."


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