Yeehaw For Open Access! C Block Reaches $4.6B Reserve - InformationWeek

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1/31/2008
12:52 PM
Eric Ogren
Eric Ogren
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Yeehaw For Open Access! C Block Reaches $4.6B Reserve

Today, the FCC's 700-MHz auction got really interesting. The C Block, which spans the entire country in two 11-MHz pairs, met its FCC-mandated reserve price of $4.6 billion. This means that the winning bidder must provide open access on a portion of its network to any compatible device. Google gets what it wants, but is it

Today, the FCC's 700-MHz auction got really interesting. The C Block, which spans the entire country in two 11-MHz pairs, met its FCC-mandated reserve price of $4.6 billion. This means that the winning bidder must provide open access on a portion of its network to any compatible device. Google gets what it wants, but is it the high bidder?That's the question of the day, and unfortunately we won't know the answer until the auction is all over with. The FCC lets us peek at the results of each round of bidding, but not the identity of the bidders, which is secret even to the bidders themselves.

Google was the company behind the FCC's open access requirement on the C block. It pushed FCC Chairman Kevin Martin hard last summer to attach all sorts of provisions to the spectrum auction. The open access mandate was one that stuck. Google also committed to bid in the auction and said it was prepared to spend the $4.6 billion to reach the C block's reserve price and trigger the open access requirement. Whether it will continue bidding on the spectrum is up in the air (pun intended).

It had recently been reported that Google wants the open access provision to be a reality, but doesn't really want to build or operate a wireless network of its own. Analysts suggested that Google would bid up to the $4.6 billion reserve price -- which would allow it to say it has lived up to its promises -- but then back off and let someone else win the spectrum.

Now that the reserve has been reached, will Google stop bidding? And who else is bidding? The most likely bidder is Verizon Wireless. Getting this spectrum would be a major win for Verizon's future network plans. Verizon has publicly said it will introduce open access measures to its existing network later this year, and it also said it's interested in deploying phones based on Google's Android platform. This block of spectrum plays right into both companies' plans.

So far the only other block to hit its reserve price is the A block, which was a hefty $1.8 billion. The B and E blocks are seeing some action, but the D Block is languishing. So far, it hasn't received any bids since the opening round and is well short of the FCC's reserve price. The D block was set aside for a public safety network. With the collapse of Frontline Wireless earlier in January, no other parties have declared interest in this block. Its fate is undecided. If it does not meet its reserve price during this auction, the FCC may choose to auction it off again.

With today's bidding, the auction total stands at $12.8 billion. This meets and surpasses the government's expectation that the auction will bring in at least $10 billion.

And there are plenty of rounds to go...

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