Bidder Meets FCC's Price for Airwaves
Buyer to Build Mobile-Device Network

By Cecilia Kang
Washington Post Staff Writer
Friday, February 1, 2008

An undisclosed bidder yesterday met the government's minimum asking price at an auction for one of technology's most coveted assets: airwaves that will be used to build a new wireless network.

The $4.71 billion bid exceeded the Federal Communications Commission's reserve price of $4.64 billion, automatically triggering a condition that requires the winning bidder to use the airwaves to construct an open network. An open network is a system usable with any mobile device and for any application.

The auction is ongoing, and the winner of the auction will not be named until it concludes.

But yesterday's development signaled victory for companies such as Google and Skype, which have said an open wireless network would lay groundwork for greater consumer choice. Cellphone companies currently limit which devices subscribers can use and which Web sites they can surf on their phones.

Google, which promised to bid at least $4.6 billion if open-network requirements were adopted, lobbied for those rules because it would enable mobile subscribers to have easier access to its services.

Google, along with Verizon Wireless and AT&T, two of the other companies bidding on the so-called C-block chunk of airwaves, declined comment yesterday, citing FCC rules prohibiting them from discussing the auction.

FCC Chairman Kevin J. Martin applauded the auction's progress.

"The openness requirement is important both in terms of the innovation it will lead to on the edges of the network and the ability of consumers to take advantage of that innovation," Martin said yesterday in a meeting with members of the news media.

But the FCC cannot conclude the auction until it resolves issues surrounding other components of its airwave auction, most critically a piece of spectrum that is on the block and dedicated for use by public-safety groups.

One of the main goals of the auction was to promote the building of a new, national wireless network for public-safety responders like police and fire fighters.

The agency set aside one segment of the airwaves in the 700-megahertz frequency and hoped to auction it to a company that could build a network for sharing with public-safety institutions in times of emergency. Currently, public-safety groups use a patchwork of wireless networks that are easily overloaded and that cannot communicate with each other.

Since the auction started on Jan. 24, however, the agency has received only one bid at less than half its reserve price for those public-safety airwaves. Five business days have passed without an additional bid.

Speaking to the press yesterday, Martin said he was optimistic the block of airwaves reserved for so-called first responders will attract interest, even though it has languished. If the reserve price is not met, Martin said the commission would reevaluate the rules of the auction.

Whether the auction is successful will depend largely on whether the FCC can achieve its goals other than raising sufficient money, said Ben Scott, policy director at Free Press, a public-interest firm focused on communications issues.

"To me it looks like they are going to get the money, but not the public-safety network," Scott said. If the auction is won by either Verizon Wireless or AT&T -- both of which control the biggest wireless and high-speed Internet companies -- it may also fall short of the FCC's goals of adding new competition, he said.

Those companies "are highly unlikely to build out a network that would compete with their services," he said.

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