Google is smart

April 15 (Bloomberg) -- Google Inc. manipulated a U.S. government spectrum auction by bidding just enough to trigger rules that will open a nationwide set of airwaves to any device and then walking away, Republican lawmakers said.

The so-called open-access requirements, also backed by consumer groups, may have shortchanged taxpayers by discouraging more companies from bidding, Representative Fred Upton, a Michigan Republican, said today at a hearing.

``Google was successful in gaming the system,'' Upton said. The rules were a ``social engineering'' experiment by the Federal Communications Commission that prevented the spectrum swath, known as the C-block, from raising billions of dollars more, he said.

Google offered $4.71 billion for the C-block, surpassing a $4.6 billion threshold that activated the rules. Verizon Wireless later won the airwaves with a $4.74 billion offer. Google, the most-used search engine, said that while it was prepared to win the airwaves, its main goal was to ensure the open-access rules took effect.

Republican Representatives Cliff Stearns of Florida and John Shimkus of Illinois echoed Upton's comments. Shimkus asked whether Google had ``duped'' the FCC by bidding primarily to trigger the open-access rules.

FCC Chairman Kevin Martin said the agency wasn't duped, adding that the rules weren't designed to prevent any company from bidding.

``My goal was to make sure that whoever won the C-block had an open platform,'' Martin, a Republican, told the House telecommunications subcommittee.

More Choices

The rules aim to boost consumer choice by requiring the C- block winner to let any legal wireless handset or program use the network. Opening the network to more devices may help Mountain View, California-based Google sell more advertising on phones by expanding consumers' access to mobile Web content.

The auction raised a record amount of revenue and created ``historic new rights'' for wireless subscribers ``as a direct result of Google's bidding,'' company spokesman Adam Kovacevich said.

``By any measure, that's a huge success for consumers, and we're proud of our role in helping make that happen,'' Kovacevich said today in an e-mailed statement.

Google said months before the auction that it would bid enough to trigger the open-access rules if the agency adopted them, Democratic FCC Commissioner Jonathan Adelstein said.

``They put over $4.6 billion of their capital at risk,'' Adelstein said in an interview after the hearing. ``That's not a game. That's real money that could have come out of their pocket if Verizon hadn't come out and bid more.''

The C-block comprises about a third of the auctioned airwaves, which will become available when television broadcasters switch to digital signals in 2009. The auction, which ended March 18 after two months of bidding, raised $19 billion, exceeding government projections of as much as $15 billion.