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a. Token face-saving bids -- just enough to maintain political credibility, not enough to actually worry about winning the spectrum and having to write a multi-billion dollar check.
b. Tactical bidding -- just enough to win a few small but vital chunks of spectrum which it can subsequently use as bargaining in negotiating with firms like Verizon and AT&T.
c. Strategic bidding -- do what it takes to to obtain large amounts of spectrum -- enough to build an alternative path to at least 80% of the US population.
My personal bet is on c -- I suspect Google's management is smart enough to realize they have a good thing going, but it is vulnerable to attack by firms like Verizon, AT&T and Comcast. Those firms are more of a threat to Google's long term position than Microsoft and Yahoo.
And, Google has shown a willingness to spend lavishly on "beta" services that seem to have little or no prospect of generating profits for Google, provided the offerings could serve to undermine the monopoly power or financial strength of Google's rivals. Think about which firms are actually profiting from maps, spreadsheets, word processors, email, etc.
Unlike these existing Google "beta" offerings, a wireless network might be profitable for Google. But even if weren't, such a network would help protect Google against the single greatest risk it faces: the possibility that the major internet network firms will gain more market power, or leverage their existing monopoly power (e.g. over the "last mile" into the home) to tax away Google's profits, or grab a large share of the search market by making it easier for their customers to use their network's search engine, rather than Google's. As search technology matures, the winner may no longer be the "best" search engine, but whichever one is easiest to reach, or most prominently displayed in the user's browser.
I think that "C" is the only logical choice. If GOOG had their own wireless ISP service then they could make sure that every wireless phone using Android had Google search enabled for free, with a lot of advertising revenue to go with it. The day is fast approaching when we will look back at the need to be connected to a cable for the internet with some nostalgia. The laptop that I type this on is smaller than the 14400 modem that I first got online with, and cost less too. I even remember paying by the HOUR for my slow dialup internet connection.
I do wonder how Google will feel about Net Neutrality when the torrents starting using up all their bandwidth. We may see them cross to the other side of the issue when it costs them money instead of making them money.