Biggest rumor since iPhone: Google's mobile OS

Google may not be releasing an iPhone-like competitor (even though there were rumors of Google and HTC being in bed together) but they most likely are going to make an mobile Operating System to compete with the iPhone interface and Windows Mobile. If it were that simple everyone would just be hanging aroud waiting...but it isn't. How does the 700 mHz auction that Google has been fighting for relate to this OS ? Does Google plan on releasing a device that has nationwide free internet ? Makes sense with their ad-based business model. Without a retail pipeline in place a device seems unlikely but very intriguing

From Reuters:
"The Journal reported that Google was expected in two weeks to announce advanced software and services, enabling handset makers to sell Google-powered phones by mid-2008, citing people familiar with the matter. Google declined to comment."