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Google, Motorola, and Our Nationwide Bandwidth Market Failure
September 13, 2011 - 8:15pm

I've been mulling over the Google $12.5 billion purchase of Motorola Mobile.

The consensus on the rationale for the purchase seems to be:

Patents: The deal is really about Motorola's 17,000 patents, and the need for Google to have patents to fight off mobile operating system lawsuits by Apple, Microsoft, Nokia and who knows who else.

Cash: Google has about $39 billion of cash on hand, and without making big acquisitions they'd be pressured into paying dividends.

Android: Owning Motorola gives Google a fighting chance that an iPhone killer Android powered phone would emerge, as GoogOla phone could enjoy the tight software/hardware coupling that Apple achieves (while keeping Android open source to encourage more mobile devices in the ecosystem).

These all seem like reasonable reasons to buy Motorola Mobile, but none of these explanations comes close to justifying a $12.5 billion price tag. I can't help thinking that Google could have taken some of those billions and invested those dollars in our nationwide bandwidth market failure.

Google has invested in 1 gigabit-per-second broadband service around the Stanford campus - and is doing some stuff in Kansas City, Kansas - but it seems like the opportunity (and the need) is much bigger. I'd happily pay more money for much faster connection, and I bet I'm not alone. With the billions that Google has on hand they could invest heavily in buying local ISPs, and upgrading them for fiber-to-the-home. What about investing in WiMax? I'd even rather see Google buy a cell carrier (Sprint/Nextel - market cap $10.5 Billion), and invest some serious money in mobile bandwidth.

The terrible bandwidth problem in the U.S. will prove to be the most important rate limiting step in the evolution of education. Slow speeds, erratic service, high prices, and the unavailability of robust data plans for mobile devices will limit how quickly and thoroughly we can move learning to digital and mobile platforms.

South Korea will blow us away.

Placing little bets on bandwidth, but huge bets on hardware/patents, is the exact opposite of the strategy that Google should be taking. Maybe Microsoft will be smarter?



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