Correct, after iPhone was released, it became apparently to Google that it wasn't just the carriers which were a roadblock to Google's unfettered monetization of the mobile space, but also Apple. Google leadership had these ridiculous fantasies of strong-arming US wireless carriers into ultra cheap unlimited data plans, and/or buying the 700Mhz spectrum for their own country-wide coverage with no dead zones. Hence the spectrum bid. When Apple released iPhone, it was not only a better product than the internal developing Android devices, but Apple also struck an exclusivity deal w/ AT&T which set the price point for these new devices. Google not only had their leverage yoinked out from under them, but they also started to realize becoming a wireless ISP is harder than they thought, and had no choice but to release what they could. I'm guessing at the time T-mobile needed the business inject the most of the big 4, and made Google the best partnering offer.
I was at google at the time of the spectrum bidding (but not having anything to do with phones) and that was a different situation. Recall that there was some minimum amount of money in the spectrum bid to require that the wireless data use would follow net neutrality rules. I remember they discussed this at TGIF and google was bidding up until it went over that amount. It wasn't a secret, it was openly discussed at tgif.
