Google CEO has no plans to compete with mobile operators

The company is still focused on search, advertising and business software, but is increasingly putting mobile first

Google has made investments in wireless networks, is testing gigabit-to-the-home technology, and is selling 60,000 Android smartphones a day -- yet has no plans to compete with network operators, CEO Eric Schmidt told attendees at the Mobile World Congress in Barcelona on Tuesday.

"Google benefits from the adoption of broadband everywhere, in mobile networks and in fixed networks," Schmidt said.

But its investment in WiMax network infrastructure, and its trials of FTTH (fiber-to-the-home) that can deliver a gigabit per second to each household, are not a sign that it wants to become a network operator itself, he said.

"We are not going to be investing in broad-scale infrastructure," Schmidt said. "It's a very tough business and it's not one for which we are very well optimized."

Instead, the company will focus on its search advertising and enterprise software businesses, he said, with most of the money continuing to come from advertising.

Schmidt delivered the keynote speech at Mobile World Congress, then answered questions from the audience about the company's activities.

Increasingly, those activities are going mobile, Schmidt said, with more than half of search queries already coming from mobile phones in some developing markets.

As the company rolls out new applications, its engineers are increasingly developing for mobile first because they are more excited by its greater potential, although the goal is still to develop for all platforms and not to favor Android, the mobile OS that the company helped develop, he said.

Two of his colleagues appeared on stage to demonstrate some of the company's latest search innovations -- on mobile phones.

Hartmut Neven began by demonstrating the company's search-by-voice service. It already understands English, Japanese and Mandarin Chinese, but Neven revealed that it now also understands his native German.

He also showed an enhancement to Google Goggles, the search tool that recognizes images and returns related search results. By linking Goggles to an optical character recognition engine and then sending the output to an automatic translator, Google can now deliver on-the-fly translations of physical pages, not just Web pages.

When Neven photographed a German restaurant menu with his smartphone, Goggles returned an appetizingly accurate translation: "Spring salad with wild herbs and Parmesan cheese wrapped in bacon."

Some people dream of being able to combine speech recognition and automatic translation into a sort of universal translator, allowing anyone to speak with anyone else, said Schmidt. "We are not quite there -- but it's coming."

Another of Schmidt's colleagues, Eric Tseng, was less lucky with his demonstration. He clicked on a video on the front page of the Web site of the The New York Times, only to be faced with a spinning cursor as the phone struggled to play it. Tseng said the phone was "buffering" the video and blamed its slow performance on congestion in the Wi-Fi network. A second video, a movie trailer stored on the phone, played more successfully.

The demonstration was intended to herald Google's plans to support Adobe Flash on Android, something that would differentiate it from Microsoft's new Windows Phone 7 Series software, which will not support Flash in its first version, or Apple's iPhone and iPad, which do not support Flash.

Tseng's choice of reading material was no coincidence: At the iPad's launch last month, Apple CEO Steve Jobs famously showed it displaying the front page of The New York Times site with blanks where the videos ought to have appeared.

After the demonstrations, questions from the floor allowed Schmidt to explain Google's views on net neutrality, particularly in relation to streaming video.

Operators should be free to block or throttle back use of services such as video streaming, which consume a lot of bandwidth and degrade the service for other network users, he said.

"We believe it's important for operators to be able to deal with too little capacity or misuse of their network, because wireless networks inherently have constraints on them," he said.

However, such limitations should be applied to all video sites, not just YouTube.

"We don't want people to discriminate between different providers of the same kind of media," he said.

He predicted that networks will eventually charge the 1 percent or 5 percent of subscribers who use the most bandwidth extra for their data consumption. "All operators will be forced to do this," he said.

Schmidt had other good news for network operators, suggesting that they were better placed than credit card companies to bill and charge for online services such as application downloads.

"Operators have the most efficient billing operations," he said.

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