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Google Enters the Cell Phone Race

STEVE INSKEEP, host:

It's Christmas MORNING EDITION from NPR News. Good morning. I'm Steve Inskeep.

This week, we're exploring the fast-changing world of wireless communication. This year, the Apple iPhone was introduced with great hype. Fans cooed over the sleek design and a flashy Internet access. But chances are that within a few years, even the iPhone is going to seem outdated.

Next month, the federal government auctions off a new swat of airwaves. And that's expected to usher in a new generation of wireless devices and services. The companies getting into the act include Google.

NPR's Jim Zarroli reports.

JIM ZARROLI: Among the significant but little remark upon changes in the wireless business this year was this one - the industry's main trade group, the Cellular Telecommunications Industry Association changed its name. It now calls itself CTIA-The Wireless Association. There is a reason for the change.

Mr. JOE FERRAN (Spokesman, CTIA-The Wireless Association): What was a phone a little while ago is no longer a cell phone.

ZARROLI: The association's spokesman Joe Ferran says the term cellular phone has become obsolete because the average cell phone has morphed into a wireless device.

Mr. FERRAN: It is now a lifestyle tool. It's how you can e-mail; it's how you surf the Internet. You can watch live video. You listen to your favorite music, take and send photos and, of course, yes, it still does make a phone call.

ZARROLI: To see how much wireless technology has exploded, pay a visit to the electronic store J & R Music World in lower Manhattan. There are as many as 150 types of wireless devices on sale here. Even the trendy clothing company, Prada, now sells one. Marty Singer(ph) is the store's head of corporate sales.

Mr. MARTY SINGER: What we're starting to see was seeing the device is getting the lot smaller. We're seeing the device that's becoming more and more powerful. So they're having more memory, the access time is becoming a lot faster, and the prices are coming down. So that's allowing the average consumer to enjoy the technology.

ZARROLI: The pace of innovation and wireless has been fast and furious, and starting next month, it will accelerate. The government is auctioning off part of the broadcast spectrum. It's the part that's now being used for analogue TV signals and that's being freed up because TV channels have been moving to digital technology.

Joe Ferran says as spectrum goes it amounts to prime real estate.

Mr. FERRAN: It's very rich spectrum. It has very good propagation features. It can travel through walls. It does a lot of things that other spectrum bands can.

ZARROLI: In short, it's the kind of spectrum that companies developing wireless services and products can't wait to get their hands on, says telecommunications analyst Roger Entner of IAG Communications.

Mr. ROGER ENTNER (Senior Vice President, Communications Sector, IAG Communications): Having spectrum is like money. You never have enough. And they are expecting increase demand from the - from customers to actually use that. And so, they are preparing for the future.

ZARROLI: The spectrum is so desirable that more than 200 companies and individuals have told the FCC they'll bid on part of it. They range from tiny regional phone companies to mega-players like AT&T and Verizon.

But the bidder that's really shaking up the auction is none other than Google, the search engine company and Internet-advertising giant. Google didn't want to comment for the story. Like all the bidders, it's restricted by the FCC from saying much about the auction ahead of time. So it's not clear what Google plans to do with the spectrum.

But Roger Entner says Google isn't going to be selling phone service.

Mr. ENTNER: They want to control the advertising space and how people are accessing information. And the best way how they can do that is if they also control the network.

ZARROLI: In other words, he says, Google wants to make sure that Internet users can readily access its search engine and use its other services. And it might not be able to do that if these new wireless networks are controlled by giants like AT&T. Google even helped persuade the FCC to change the auction rules for part of the spectrum. Winning bidders will be barred from placing restrictions on who uses the network. That means anyone can develop new services and software for wireless devices and the networks have to carry them.

John Leibovitz is executive vice president at Frontline Technologies, which is among the bidders.

Mr. JOHN LEIBOVITZ (Executive Vice President of Business Development, Frontline Wireless): And this means that there'll be just a huge amount of innovation and new services created. Many of which no one has thought of yet. Some will be thought of by little companies' garage-stage entrepreneurs, and some of them will be thought of by big companies.

ZARROLI: Leibovitz says one lesson of the wireless revolution has been that when people can access the Internet from anywhere, they tend to use it a lot more. They use it to find restaurants, when they're in an unfamiliar neighborhood or to answer questions that come up at meetings.

Next month's wireless auction will usher in a new era of technological innovation. And that means the Internet will end up being an even bigger part of people's lives than it is now.

Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

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Jim Zarroli is an NPR correspondent based in New York. He covers economics and business news.