Bids for Spectrum Pass $4.7 Billion

By Cecilia Kang
Washington Post Staff Writer
Wednesday, February 6, 2008

Bidding on a coveted block of wireless frequencies continued yesterday, as unidentified companies continued to compete for rights to build the nation's first open wireless network.

By the end of day, aggregate bids in the Federal Communications Commission auction of the C Block of airwaves had exceeded the $4.7 billion bid last week. Those airwaves, in the 700-megahertz range, now used for transmitting analog television broadcasts, will be redesignated for high-speed wireless traffic. They are considered especially valuable because broadcasts on that band can carry farther than other signals.

The FCC is auctioning off several blocks of spectrum in the 700-MHz range, and total bidding for those blocks has reached $18.9 billion. The commission's goal had been $10 billion.

When the C Block, the largest swath of airwaves up for auction, reached its minimum reserve price on Thursday, the bid triggered the commission's rule that the airwaves be used to build an open network, which would allow the operation of any device or software application. Currently, cellphone companies can restrict which types of phones consumers use with their networks, and what kinds of services they can use on those phones.

The openness condition was endorsed by such companies as Google, which hopes that fewer restrictions will enable customers to use its services more easily.

Paul Gallant, an analyst at Stanford Group, said the block of spectrum will be key to competition in high-speed wireless over the next few years. "It will help establish who has the best network and can offer the best applications to consumers," he said.

Gallant said Verizon Wireless needs more airwaves than its chief competitor AT&T, which has accumulated spectrum more rapidly than other companies in the business. Separate from the auction, AT&T said yesterday that the FCC approved its $2.5 billion purchase of spectrum licenses from Aloha Spectrum Holdings in 281 markets.

The auction's winners will not be announced until bidding on each of the five blocks of spectrum is complete, a process that could last weeks. One big holdup could be that the FCC has not received a minimum bid for licenses it hoped would be purchased by a company that would build a network to be shared with public-safety agencies.

Speculation about the identity of bidders remains intense.

Google likely is not trying to win the auction but may have placed the $4.7 billion bid last week to ensure that the winning bidder would open the network, said Rebecca Arbogast, an analyst at Stifel Nicolaus. Google is unlikely to want to build and operate a network -- which would cost billions of dollars -- on top of buying the licenses, she said.

If Google placed last week's bid, then Verizon Wireless is the most likely company to have outbid it, she said.

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