Google Lobbies for Cheaper Airwaves

Internet Giant Presses Regulators to Free Up Low-Cost, Mostly Vacant Spectrum

By Ryan Knutson 

Updated Jan. 5, 2015 7:53 p.m. ET

WASHINGTON—Having carved out a leading position in the software that runs cellphones, Google Inc. is now angling for a role in the networks that connect them.

That isn’t to say the Internet giant wants to set up thousands of cell towers to compete with carriers like AT&T Inc. and Verizon Communications Inc. Instead, it is lobbying U.S. regulators to free up vast amounts of low-cost, mostly vacant spectrum that could serve as an alternative to the big carriers’ services.

The plan that Google and others are backing would open up as much as 150 megahertz of spectrum around the 3.5 gigahertz band, pushing to make it usable by all comers without a license while still leaving some of it available for companies to use exclusively.

The 3.5 gigahertz airwaves aren’t much use to wireless carriers, because they aren’t good at carrying signals for long distances. But they are useful for delivering heavy loads of data in cities, which could make them viable for a lot of typical wireless needs—the way Wi-Fi is now, but potentially broader and more available.

The spectrum would enable startups funded by venture capitalists, for instance, to build speedy wireless networks in parks, buildings or public areas relatively inexpensively, thus making it cheaper for consumers to access the Internet—and ultimately use more of Google’s services like search, Gmail and YouTube. Android operating system mascot greets visitors at Google’s headquarters in Mountain View, Calif. Associated Press

Google declined to comment on how it might use the spectrum, if at all. But speculation about its interest in wireless has been building. The company has already started rolling out fast, wired Internet service in a handful of cities via its Google Fiber, demonstrating an interest in providing Internet service. It also has been experimenting with hot air balloons that would shower remote areas with wireless coverage.

Milo Medin, a Google executive who previously led Google Fiber, is heading up an unspecified Internet access project. The company also recently hired Andrew Clegg, a spectrum expert at the National Science Foundation, and Preston Marshall, a spectrum expert formerly of DARPA. This summer, it bought wireless startup Alpental Technologies, which was founded by two former Clearwire Corp. engineers and specializes in developing cheap, high-speed wireless access technologies.

“They’ve been kind of deep in this way of thinking for a long time,” said Michael Calabrese, director of the Wireless Future Project at the New America Foundation, who has written to the FCC in support of the idea.

Hurdles include developing devices that work on the spectrum and managing the open-access use. Wireless carriers give the idea lukewarm support. While the national carriers say they are in favor of a sharing model, they have also pushed for a transition period that would delay its implementation. Moving any faster, AT&T said in an August FCC filing, would “plunge the 3.5 GHz band into a quagmire of uncertainty.”

If carriers don’t widely use the spectrum in their networks, it could discourage phone makers from making sure new devices can use it.

Since early 2013, more than any other company, Google has lobbied the Federal Communications Commission on the idea during at least 10 meetings and in more than 100 pages of highly technical filings. The FCC could finalize rules for using the spectrum this year.

The Internet company sees the move as a first step toward draining some of the cost out of the wireless industry, people familiar with its thinking said. Google makes money when people use the Internet more often, but the high cost of wireless-data service leads many subscribers to think twice before queuing up another YouTube video or downloading another song.

There is an ideological element, too. Google and its allies believe current spectrum policy promotes scarcity by letting a handful of companies lock it up. Bids in the current ongoing auction, for example, are nearing $45 billion, a price that is out of reach for most would-be rivals. Instead, they’re pushing to make more spectrum usable by all comers without a license.

“We are helping to make Internet bandwidth more abundant,” Google executives told an FCC commissioner during a September meeting in Mountain View, Calif., according to an FCC filing. “The broadband ecosystem will be well-served by a policy environment that removes barriers to investment, discourages monetization of scarcity, and empowers consumers.”

Already, most wireless data is consumed when people are stationary, via Wi-Fi, which carried 93% of all mobile data traffic in the U.S. in 2013, according to Cisco Systems Inc..

Paying for the rights to use airwaves, or spectrum, is one of the wireless industry’s most expensive inputs.

The book value of Verizon’s airwaves alone is more than $75 billion, according to its securities filings, and carriers need more of it to satisfy growing demand for accessing the Internet via smartphones. Expensive networks lead to higher cellphone bills, and subscribers typically pay more as their wireless Internet use goes up. Middle-income American households spent nearly 50% more on cellphone bills in 2013 than in 2007, according to data from the Bureau of Labor Statistics. The typical monthly bill for Verizon Wireless accounts rose to $161.24 during the third quarter, up from $155.74 a year earlier.

The reason the idea leads to cheaper airwaves is because more of it would be shared. The 3.5 megahertz channel is mostly untapped, aside from some military use and a handful of rural wireless Internet providers.

The military use had been a major hurdle, because the Navy operates radar systems in the band and the government has argued that hundreds of miles along U.S. coastlines—where about 60% of the U.S. population resides—would need to be excluded from use. But Google has led experiments that it says show the problem can be managed.

The plan Google supports would create three tiers of access. Government users would have first-tier access. Companies could apply for exclusive access to small geographic swaths in the second tier. The third tier would be open for anyone to share, similar to the spectrum used for things like Wi-Fi, Bluetooth and garage-door openers.

In areas where there were more companies seeking second-tier access than there is available spectrum, mini-auctions would be held and the proceeds would go to the government. The FCC is weighing the issue.

A key feature of the idea is that at least one company would serve as a traffic cop to direct devices to available lanes in the airwaves to prevent interference. While Google hasn’t formally volunteered to operate the system, it has built a prototype and has a similar system in place for the slivers of spectrum situated between TV channels.

The idea originated with a 2012 report by the President’s Council of Advisors on Science and Technology. Among the more than two-dozen authors were Google Chairman Eric Schmidt and Mr. Marshall, a former DARPA researcher now employed by Google. Mr. Medin, FCC Chairman Tom Wheeler and now-former Microsoft executive Craig Mundie also helped.

“It’s really kind of a response to this conventional wisdom that spectrum is scarce,” Mr. Calabrese said. “Auctions aren’t going to yield the spectrum capacity we need for affordable wireless ubiquity.” 

Write to Ryan Knutson at ryan.knutson@wsj.com