The recent pledge by Google (Nasdaq:Goog) to bid $4.6 billion for a significant chunk of the 700-MHz wireless spectrum that will be auctioned off by the FCC in January is likely to catalyze competitiveness in the wireless marketplace. The spectrum, which will become available following the release of its use for analog TV in 2009, is relatively low frequency (700 MHz compared with WiFi's 2.4 GHz), which makes it highly attractive for providers seeking to roll out nationwide broadband voice and data services (including next-generation 3G and 4G services) since lower-frequency signals require less power, and therefore lower cell density, translating to lower operational costs for carriers.

Google's move is designed to pre-emptively open up next-generation wireless services, threatening the carriers' current "walled-garden" business models. Google's bid comes with two conditions that, if accepted, must apply to the entire spectrum being auctioned: Open access (meaning that winning bidders would need to connect to any standard end devices, the way any PC can connect to the Internet) and wholesale resale (meaning that winning bidders would also be required to resell their bandwidth on a wholesale basis to other firms).

Open access is similar to the "Carterphone" decision in the 1970s. Just as that decision led to the competitive, diverse telecom market of the 1980s and 1990s, it's likely that open-access wireless services would lead to lower costs and a plethora of new services. Wholesale resale, in contrast, is closer to the failed efforts at enabling competitive access in the 1990s; there are no clear examples of forced wholesale resale leading to new markets, lower costs, or increased services. The debate is actively under way in Congress, with regulators leaning towards supporting open access but not wholesale resale.

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