Google doesn't own wireless spectrum. But if it did, the company could upend the wireless industry by instituting a new system of bandwidth bidding.
In a patent awarded yesterday, Google showed how it could dynamically auction off data capacity based on individual device requests. In other words, consumers could choose to activate an application or start an online activity – maybe play an online game or stream a movie – and at the same time purchase the amount of bandwidth needed to support that activity. The price of the bandwidth would depend on network conditions. At peak demand times, bandwidth would cost more than during low-traffic periods. You could also choose different network speeds for different prices, enabling higher or lower quality media streaming.
Setting up an auction system wouldn't necessarily replace the flat-fee bandwidth model, but it could be instituted to deal with data use above and beyond established usage caps.
There are three major implications that come to mind with Google’s patented technology:
- It could enable a whole new sales model where bandwidth is bundled with an application, like Amazon’s Whispernet on certain Kindles. Instead of being subsidized by the application, however, the associated bandwidth could just be part of the consumer cost. Think of it as a shipping fee. App providers could even run “free shipping” promotions just like brick-and-mortar retailers.
- An auction system could help operators better manage peak bandwidth demand. Like with electricity, network congestion issues aren't about total demand, but the amount people are consuming at any given moment. By pricing bandwidth accordingly, network operators could gain greater control over demand distribution.
- Think of the algorithmic potential. Just like in the financial markets, and increasingly in the advertising industry, we could turn over bandwidth allocation to algorithms that inherently can assess environmental conditions and act on them much faster than a human ever could. Of course, there are potential problems with turning all of these decisions over to computers. We’re approaching the two-year anniversary of the mysterious flash crash on Wall Street, which highlighted just how much we don’t know about how algorithms are acting on our behalf. But hey, we’re just speculating here, right?
Once again, Google doesn't own any wireless spectrum. But does that mean Google will abandon its patented bandwidth bidding system? Or that we won’t see something similar implemented in the future? I wouldn't bet on it.
Image credit: Google patent application