• GigaOm, Monday, November 19, 2007 10:48 AM

Does it make any financial sense for Google to move in the mobile wireless industry? Financial analysts have expressed reservations about the search giant moving into the complicated and expensive wireless world.

It shouldn't come as a shock that Google will participate in the FCC's wireless spectrum auction in January; after all, the company's participation is tied to the FCC's agreement to "open" a portion of the spectrum per Google's request. This means that at the very least, we will see a minimum bid of $4.6 billion from the Web giant. Even if Google wins the bid at that price, its next task is to build the network infrastructure. That could easily cost another $2 billion. Then there's the management and operational cost of running it. According to the number crunching of UBS analyst Ben Schacter, the project would cost Google about $260 million a year in lost income, which at the moment is "well less than $1.00 per share."

Google will probably not build its own network. To be sure, the Web giant will bid on the spectrum and play to win, but will more than likely outsource the development of a network to outside investors. The company has always said its focus is on mobile software, not hardware.

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