Last week was a busy one for investors on both sides of the border who are interested in the wireless market. In Canada, the federal government's decision to increase competition in Canada's wireless market sent shares in the country's top telecom companies – Rogers Communications Inc. (RG), Telus Corp. (TU), and BCE Inc. (BCE) – tumbling on Thursday.
Stateside, on Friday, Google Inc. (GOOG) said that it will bid for coveted mobile airwaves via the U.S. Federal Communiciations Commission's 700-megahertz wireless spectrum auction in a move that could pit the web search leader against U.S. wireless service providers.
Goldman Sachs analyst Anthony Noto, writing in a research note predating Google's announcement, said Google's participation in the auction is primarily to ensure that there is an open wireless network so that Google is not subject to decisions made by the carriers that would adversely impact the adoption of Google mobile services, products and applications.
He told clients that mobile is the next significant growth opportunity for internet companies like Google, with substantial upside in engagement and ultimately monetization.
Google's goal is to win only if it needs to do so to ensure openness, the analyst said. "Furthermore, we do not think that Google necessarily views building and operating a network as a good business; thus if it wins the auction, it would likely partner with a network operator."
Mr. Noto added that he would view negatively a scenario in which Google wins the auction and decides to build, and run a wireless network on its own.
He maintained his C$800 year-end 2008 price target and left his "buy" rating unchanged.