Why Google (GOOG) may stay out of wireless business

It is widely assumed that Google (NASDAQ: GOOG) will move aggressively into the wireless business by bidding for the spectrum in the January FCC auction. The price of entry for that privilege is put at close to $5 billion. Owning the spectrum would allow Google to compete with AT&T (NYSE: T) and Verizon Wireless by offering consumers low cost or no-cost wireless broadband. The search company would probably have to make most of its money by delivering advertising onto handsets linked to its network.

But, Barron's offers a powerful contrarian view of Google's move (registration required), penned by tech writer Mark Veverka. He points out that buying the spectrum and leasing cell towers could badly damage Google's balance sheet and undermine it high P/E. Veverka makes the case that wireless is a mature and saturated business in the U.S., and Google cannot afford to move into an industry that is already largely in place. The cellular carrier business is also well-regulated.

So, will Google bid for the spectrum? Probably not. It may have to rely on its handset OS, Android, to carry it into the wireless business, or form a partnership with one of the weaker players like Sprint (NYSE: S). That would be very good news for AT&T, and would mean that, to some extent, Google's future is tied to the PC.

Douglas A. McIntyre is an editor at 247wallst.com.