Minimum bid hit in FCC auction, triggering open access
The reserve price on a valuable sliver of spectrum was reached in the Federal Communications Commission's 700MHz auction on Thursday, triggering rules that would make the spectrum accessible to any device or software application.
After the 17th round in the auction, a bidder for eight licenses in the "C" block of the 700MHz spectrum auction surpassed the minimum reserve price of $4.64 billion, which had been set by the FCC before the auction began. The current bid is now at $4.71 billion. The minimum bid for round 21 is $5.18 billion, according to the FCC's Web site.
Because the bidders in the auction are anonymous, it's difficult to know who is bidding on it. But many analysts believe that Google and Verizon Wireless are the two most likely bidders in the auction. Google CEO Eric Schmidt had said publicly the company was willing to put up at least the minimum reserve price for the spectrum.
Some experts have speculated that Google may want the spectrum to build its own wireless network to compete with traditional players such as AT&T and Verizon. Others think that Google wants to build a wireless network that it can lease to other operators. But I'm more inclined to believe that Google may not really want the spectrum at all.
There's a good chance the company bid on the spectrum to make sure it reached the $4.6 billion threshold to trigger the open access requirements. And now that those requirements have been met, the company may bow out of the race.
But there is also a chance that Google has the winning bid. And if it does, the company may end up with the spectrum anyway.
Regardless of whether Google stays in the auction or not, now that the minimum has been reached, the company that eventually wins the spectrum license will have to make their network open to any devices and applications, which is exactly what Google wanted from the beginning.
Today, U.S. wireless operators have tight control over which devices can be used on their networks and which applications can be used on those handsets. Google and other companies, such as Skype, have complained that this is too restrictive.
Verizon, which has traditionally been the most strict operator in the U.S. about what it lets on its network, recently said it would allow non-certified devices on its network.
Skype, which makes software that allows people to make free and low-cost phone calls over the Internet, issued a statement praising the FCC for putting in the open access. Currently, most U.S. operators do not allow Skype to be used on handsets that operate on their networks.
"The FCC got it right in putting this spectrum to work for consumers' best interests," Christopher Libertelli, senior director of government and regulatory affairs for Skype, said in a statement. "We look forward to the day when this spectrum is made available to the broader market, so that Skype users can have their conversations whenever and wherever they would like."
Now that the open access rule has been triggered, it will be interesting to see what happens next in the auction. Earlier in the week, there was speculation that the "C" block might not reach the reserve price. After intense early bidding, the price seemed to languish. Even though there is no way to tell who is bidding, if the bidding slows again or if someone drops out, it might be an indication that Google was simply trying to pump up the price.
The "C" block is one of five blocks of spectrum in the 700MHz frequency that is being auctioned off. The spectrum is being turned back into the government auction by broadcast television operators who will switch their broadcasts to digital from analog in February 2009. The spectrum is considered valuable because it can travel long distances and penetrate obstacles like walls.
Traditional wireless companies like AT&T are bidding on spectrum. The auction has also attracted several wireless newcomers such as Google, TV satellite provider EchoStar Communications, cable operator Cablevision Systems, and wireless chipmaker Qualcomm.
The auction could last for weeks or possibly months, depending on how long the bidding goes on. The auction was expected to generate at least $10 billion. As of Thursday morning, the total bids came to $12.79 billion for all five spectrum blocks.
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie. 
They could then use all the dark fiber they own to power the network and serve mobile ads to all who use it.
Now they can refocus their effrorts into making sure the FCC approves the new White Space Spectrum as an Unlicensed (Free)spectrum and approves one of the many new radios being developed to operate in this narrow guard space.
Google wants an open wireless network they can use with partners to deliver true Fixed and Mobile BROADBAND (not CellCos Narrowband)Data services in all markets. Of special interest for them is having a delivery network (data and VoiceIP)that will allow their new vendors handheld systems (using Android based OS) to operate without the controls, restrictions and high fees required by the CellCo's.
New RAdios
Key here is what the likes of Airspan/Telesima and SOMA will do in developing new Base Stations that can operate in the 700Mhz (and 400MHZ) spectrum using WiMAX based Features. These should be available for deployment sometime in late 2009.
No need for a Nationwide standard since many small service providers will win spectrum in the EA or CMA markets and be looking for these new Radios with WiMAX to begin their deployments-bypassing both Cell and some Wired Broadband services.
Jacomo
[i]"All the carrier has to do is sign a contract with Yahoo for the advertising and Google is still dead in the water."[/i]
Not necessarily. Google can build software and sponsor the building of devices that access it, and by law and FCC rules, they have to be let in.
[i]"Google doesn't understand enough about managing networks and it doesn't have enough money to build the network."[/i]
They can hire the former, and I wouldn't be so sure about the latter - it wouldn't take much to gather partners and investments with Google in there.
/P
Chances are it will be Google, who will win and then lease the bandwidth to AT&T, Verizon, etc with the agreement that they allow any device and any software to work on that bandwidth.
Though I am betting that Google would be glad to license the GPhone Android technology to any wireless carrier, which in itself is Java based, and thus any Wireless device with Java can run the Android software. Perhaps Google will bundle the Android license with the bandwidth lease?
Imagine the irony if Apple have to open up the iPhone to use the new bandwidth and allow any software to be run on the iPhone, which would go against Apple trying to lock the phone to only run the software it wants iPhone users to run?
I have a feeling that Wireless devices will be made to broadcast television programs over the new bandwidth to replace the analog TV sets. Sort of like live streaming TV broadcasting over the wireless spectrum. A marriage of IPTV with wireless devices.
- Watch the Lower Band B Block
- by jacomo February 1, 2008 6:47 AM PST
- The suprise so far has been the major bidding in the CMA markets (Lower Band B Block) which is coming in higher in key areas then the larger EA areas (that cover far greater market space)Lower Band A Block. Doesn't make much sense. Both have 12Mhz spectrum available.
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(13 Comments)Looks like AT&T is trying to play in these small CMA markets in order to gain a Nationwide License. They own a major part of the Lower Band C Block which just so happens to be contiguous to the CMA B Block spectrum. Looks like they are fishing for bargain prices and are finding resistence from others in this space.
Jim A