Spectrum or not, Google looking to enter wireless market

It appears that Google wants to expand their lucrative Internet ad business to include cell phones. In fact, they’ve already socked hundreds of millions into the project, developing their search engine, e-mail, and even a Web browser in a mobile format. They’re even looking to develop a phone of their own.

The handsets are still prototypes, but they’ve begun pitching them to carriers such as T-Mobile and Verizon — a GSM and a CDMA, so Google might be looking to develop for both platforms. The company is attractive to wireless carriers because they can bring some extra “umph” to their data packages. However, this would also give Google a level of control over mobile advertising, which the carriers don’t want to relinquish.

And why would they? Over $1.4 billion is slated to be spend on mobile advertising this year, and that could expand to $14 billion in just four years. With voice plans returning declining revenues, carriers will certainly want to compensate with advertising. However, they also want to compensate with data plans, which Google can enhance.

“What’s interesting about the ads in the mobile phone is that they are twice as profitable or more than the nonmobile phone ads because they’re more personal,” said Google Chief Executive Eric Schmidt.

Google’s proposal for a share of the ad revenue has already been turned down by Verizon. Lowell McAdam, Verizon’s chief executive, thinks that Google is looking for a “disproportionate share” of ad revenue.

However, Verizon’s reaction could be sour grapes over Google’s entry into the wireless spectrum auction. Previously opposed to an open spectrum, Verizon’s hand was forced to favor the service, as to oppose it would leave them as loners — AT&T voiced its favor of open access early last week. This compromised Verizon’s position, and they’re probably not too happy about it. Combine that with their reluctance to open their network to third party developers, and you have a virtual shutout of Google.

If Google keeps its name in the news with these wireless services and phones, and continues its pursuit of the open access wireless spectrum, they might just make a difference. A man can hope, can’t he?

[The Wall Street Journal]

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