Since the story ran at BusinessWeek.com, it has some credibility. The online version of the magazine reports that Apple (NASDAQ: AAPL) is considering joining the government's auction of wireless spectrum, putting it in potential competition with Google (NASDAQ: GOOG).
Apple certainly has the $4.6 billion needed to enter the bidding, but the magazine says that the low margins in running a large wireless network might keep the consumer electronics company away. However, if Apple did succeed in the auction, it would have its own network for the iPhone. As a potential attraction, the company could allow its handset to use inexpensive VoIP.
Apple may have a longer-term reason to look at the spectrum. At some point, its sales of iPhones and iPods will slow in the U.S. But, having a service network would allow the company to combine video, music, and voice onto one platform, which could extend the sales life of its current products.
Another attraction might be the scale of the opportunity. Verizon Wireless will bring in about $40 billion this year. And, it is highly profitable. Offsetting that is the costs that were necessary to build out the infrastructure to support those revenues. But Apple might end up in a partnership with another company, say Google, to share those costs.
It may seem crazy, but so is the success of the iPod.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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