Google Scores FCC Win

Google's (GOOG Quote - Cramer on GOOG - Stock Picks) gamble worked.

Federal regulators changed the rules on new wireless spectrum, requiring an open standard that could work with any device.

Breaking from a tradition in which phone companies like Verizon (VZ Quote - Cramer on VZ - Stock Picks) and AT&T (T Quote - Cramer on T - Stock Picks) typically acquired rights to new radio real estate and determined what phones could be used on the wireless networks, the Federal Communications Commission says winners of the upcoming 700 megahertz auction must provide a platform that is more open to devices and applications.

The move comes a week after Google said it would bid $4.6 billion on a scheduled air wave auction to distribute former analog UHF TV spectrum to emergency services groups and wireless service providers.

Google has been interested in the newly available spectrum because it offers a prime swath of wireless real estate where the frequencies are particularly conducive to data transmission that can travel through walls.

The FCC Chairman Kevin Martin has referred to the 700MHz band as an opportunity for a "third pipe" and a "national wireless broadband alternative."

Google conditioned its bid on a requirement by the FCC to force the winner of the auction to adopt "open" platforms as part of the license conditions.

Google is planning on getting involved with the so-called fourth generation wireless or 4G business that the new radio waves open up. If Google acquires a slice of the radio waves, it will likely push an open platform approach and act as a wholesaler allowing other companies to resell a variety of services, say observers.

"The 700 MHz auction may well be the FCC's most important wireless-related action for many years, because it could lead to the introduction of new facilities-based providers of broadband services, wielding new business models," Google attorney Richard Whitt wrote in a letter earlier this month to the FCC.

Google shares were unchanged at $510 in after-hours trading, while AT&T was up modestly and Verizon was down 2%.