In-Brief: John Puterbaugh, Nellymoser Founder & Chief Strategist, talks with MSG about the spectrum auctions, the Android platform and innovation at the edge of the network.

Today we know the 700 MHz auction attracted 1,849 bids totaling more than $2.4 billion during the first round. RCR Wireless, which has the most comprehensive coverage, gives us a run down of the bids and concludes (unsurprisingly) that AT&T, Mobility, and Verizon Wireless will likely dominate 700 MHz bidding. What about Google? Even if it loses the auction, it comes out a winner because a bid at $4.6 billion triggers open access and consumer choice conditions that will likely transform the wireless Internet.

I caught up with John Puterbaugh, Founder & Chief Strategist of Nellymoser, a company providing a comprehensive platform for delivering rich Mobile 2.0 services. In addition to his “day job,” John is an industry pundit whose blog, Mobile 2.0 and Emerging Mobile Media Services, rocks (!) How open is open access? What is Google’s game plan? What about Apple? These are some of the questions John and I explored in a Q&A (more like a mind-meld) before he jumped on a plane. Here is an excerpt:

Q: An operating system optimized for Google apps, wireless spectrum, and all the other assets that Google has developed or acquired. What do you see when you connect the dots and consider what’s at stake in today’s auction?

A: I think it’s just a replay of what Microsoft did for the PC, except Google is going to make it all free and open for us. They really want to drive the larger agenda of being a technology platform for monetizing advertising.

Microsoft built the OS and then it built Word and those types of programs for the PC. The PC became the electronic office [and] the company that provides the operating system provides with it the key to desktop applications that you [would] need. Likewise, in mobile, Google is bringing the key things that you need for a mobile phone; mapping, mail, SMS, and messaging. They are focused on providing the apps and the OS.

However, they will bite off more than they can chew if they go on and try to become the wireless operator or ISP as well. I also think their investors would look down on it because the margins Google enjoys today [in providing a software business] are very different from the margins that network providers enjoy. Having to spend five to ten billion dollars on licenses and then another five billion dollars a year for the next five to ten years is a pretty hefty investment with much lower margin returns.

Q: Is Google playing to win when it comes to the open-access C Block? And what is the likely outcome?

A: The question is whether Google is really intending to get this [spectrum]. It may be that they just want the open access provision in there [the conditions] and then they’re out. It could be very disruptive if Google actually won this [auction]. Without the open access provision, Google is done. It doesn’t have the spectrum to become an ISP.

I don’t know if it would be a good thing [if Google got the C Block], but it certainly would be a game-changer and have radical impact on the businesses of satellite companies, cable providers and other traditional providers.

It is conventional wisdom that AT&T and Verizon, because they already have a lot of existing infrastructure, are in the strongest position and will outbid Google.

Q: Some more cynical observers suggest this is core to Google’s real agenda. If operators have to tie up resources in this auction, then they might not actually be able to complete the network build. At the very least it could slow them down…

A: This is a possible scenario. I think that you’ll see some smaller bidders buying pieces of the 700 MHz Spectrum and throwing up WiMax networks very quickly. That’ll happen much faster than Verizon and AT&T [will be able to] build out these larger LTE, next generation cellular networks. Certainly the open spectrums of 2.5 GHz and 5 GHz and Wi-Fi have really enabled a ton of innovation. Just look at the Apple iTouch – and I think this is just the beginning. The innovation is happening in the Wi-Fi space.

As [the economist Andrew] Odlyzko notes in his most famous article [entitled] “Content Is Not King”: The innovation comes from the edge of the network. The content of the Web, email, IM [instant messaging], YouTube. All that has come from the edge of the network. In contrast, carrier applications like WAP have been duds compared to the innovation that’s been done at the edge. Companies like Apple and Google are really focusing on creating innovation at the edge and I think Apple’s done a really great job in pulling together the Apple TV, their notebooks, the Touch, the iPhone. They are really enabling the innovation at the edge of the network. And if that edge has open access to the IP network through wireless, then I’ll bet they’re off [and ahead of the carriers].

Q: If open access is the end-game, not spectrum, then Google can’t really lose the auction. Either way they have an on-ramp onto the wireless Internet with Android devices and services…

A: That’s right. Google devices will b able to run no matter what anyone does and that will drive openness. Google has sort of forced the carriers to see the light and see that any device can be attached to their network. At least in the U.S. it’s going to look much more like a GSM environment and you’ll have a much wider range of devices that will be available and be coupled from the carrier’s’ control.

Android makes the handset accessible to content [companies] and developers. Combine that with a network that will allow any device to tap into it and we have two aspects of openness that are key and that will drive more innovation, more content, more discovery and more search.

Q: Can we be sure of that? There are many that point out Android is just another platform and another headache for developers that already develop for Symbian and Windows, for example.

A: Yes, it means more fragmentation as well. Developers are slightly reticent to just jump on board with the Android. You have some activity, but a lot of developers are waiting with their decision until they know when handsets are coming out, what type of reach they’ll have and which carriers are signed on. Overall, developers will be somewhat cautious until they know a bit more about Google and what to expect.

I think a lot of developers that have been attracted to the Android platform are actually Web developers that have never developed for mobile before. In view of this, I think Google will attract a whole new class of developers [from the Internet] that will create new applications.

This entry was posted on Thursday, January 24th, 2008 at 11:01 pm and is filed under Mobile Advertising, Mobile Content, Mobile Search, Web 2.0. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.