Sprint-Clearwire: Google's Role Too Big? Pay-For-Access Deal Raises Net Neutrality-Like Concerns
This story was written by Tricia Duryee.
Over the last year, Google (NSDQ: GOOG) has made its presence known in the wireless industry, not for its applications, but instead, for its position on open access. The internet giant has been extremely vocal, arguing that wireless networks should be more like the Internetthey should be available to all devices and applications. In fact, the argument was so compelling, the FCC took action by saying that a swath of airwaves Verizon Wireless (NYSE: VZ) bought in the recent auction must be open to all devices and applications. But now, Google is investing $500 million as part of the $14.5 billion deal between Sprint (NYSE: S) Nextel and Clearwire (NSDQ: CLWR)and in return it is getting tremendous access, not only to the WiMax network, but also to Sprint's existing cellular network, putting into question how open the two networks will be going forward.
Both Google and Clearwire dismiss these fears. Clearwire's CEO Ben Wolff, who will lead the new joint venture, told mocoNews today that the 4G network will be open and not have the constraints of a 3G networkand that any applications Google builds will be optional for the customer. He said the applications should be great since the two companies will work closely together to build specific applications for the network. "We will benefit from it and so will theyone of the reasons it appealed to them is because with a 4G network, they can have a commitment to opennesswe don't have the constraints that come with a 3G network."
Google product manager Larry Alder wrote today on the company's blog that the deal will further openness: "We believe that the new network will provide wireless consumers with real choices for the software applications, content and handsets that they desire. Such freedom will mirror the openness principles underlying the Internet and enable users to get the most out of their wireless broadband experience. As we've supported open standards for spectrum and wireless handsets, we're especially excited that Clearwire intends to build and maintain a network that will embrace important openness features. In particular, the network will: (1) expand advanced high speed wireless Internet access in the U.S., (2) allow consumers to utilize any lawful applications, content and devices without blocking, degrading or impairing Internet traffic and (3) engage in reasonable and competitively-neutral network management."
Still, for $500 million, Google is buying a lot of rights. Check out the list after the jump.
-- the right to develop Internet and advertising services and applications for Clearwire's WiMax devices, extending its advertising lead from the Internet into mobile.
-- the right to be the default search provider and the preferred application provider for Clearwire's new retail product. It will be interesting to see how extensive this goes. Currently, Clearwire uses Google to provide ISP-like services, including mail. But presumably, a user would be able to choose a different search provider if they wanted. In other words, Clearwire may make Google's services more accessible, but won't block any other provider.
-- Clearwire will use Google's Android operating system for future voice and data devices. As long as this isn't the only OS that Clearwire can support, this seems less significant, although it will give a good boost to the upcoming OS.
-- Google mobile search: Google will become the default search provider for web search and local search (GPS-enabled) on the Sprint portal for current and future customers. I believe this means Google is winning this away from Microsoft (NSDQ: MSFT). On select new devices later this year, Sprint customers will be able to bring up a Google search bx on their device's home screen, providing them with one-click access to Google mobile search.
-- Has the option to enter into 3G and 4G wholesale agreements with Clearwire and Sprint, but has no current plans to do so. This could get very interesting. Google was a participant in the most recent spectrum auction. In hindsight it looks as if it wanted to get the bids to the minimum price at which point the open-access rules would kick in, but it was willing to take the risk that it may just win the spectrum.
-- Through its cellular/3G partnership with Sprint, Google will get various apps on Sprint phones by this summer:
-- Google Maps for mobile: Also featured on new Sprint handsets and available on some current smart phones will be Google Maps for mobile, an application that enables users to view maps and satellite imagery, find local businesses, get driving directions and view real-time traffic information.
-- YouTube: YouTube videos will be accessible from select new Sprint handsets.
By Tricia Duryee