700 MHz Auction: Open access assured

700 MHz C-block bidding passes the $4.6 billion threshold

In today’s opening round of the 700 MHz auction, a bidder pushed the C-block nationwide license over the $4.6 billion reserve price set by the FCC, ensuring that whichever bidder wins the license must launch an open-access network that will support any competitor’s device or application.

No one but the FCC knows who placed the landmark $4.71 billion bid, since the FCC has decided that the bidders’ identities will remain secret until after the auction closes. But the bidder is more likely than not either Verizon Wireless or Google, both of whom have a highly vested interest in that particular block of spectrum. (For full auction results see the FCC’s Auction 73 page.)

Bidding on the C-block had stopped completely for three straight rounds on Wednesday, the longest spell so far that the nationwide spectrum had failed to attract a bid. That gap led Stifel Nicolaus to predict in a research note that one of the bidders had either run out of waivers to maintain its eligibility in the auction or was about to. Stifel Nicolaus said if a bid did not arrive Thursday morning, that bidder would have fallen out of the auction, leaving the provisionally winning bid stuck below the FCC’s reserve price.

Verizon Wireless is searching for spectrum over which to launch its future 4G network. While Verizon loaded up on licenses in 2006’s Advanced Wireless Services auction, its coverage in those bands are not nationwide. Verizon chief technology officer Dick Lynch has said the carrier will likely launch its Long Term Evolution trials over the AWS band, but he also identified the 700 MHz band as optimal frequencies for such a deployment, due to its high propagation.

Google on the other hand has been more coy about its interest in the spectrum. While Google is planning on being in the wireless business, it doesn’t necessarily want to be a network operator. So Google’s primary interest in the auction was to ensure that the C block passed the open-access threshold, which would require the eventual winner of the license to allow Google’s applications as well as devices using its new Android operating system on to the network.

If the C block competition has indeed been a contest between Google and Verizon Wireless, Google may now drop out of the auction. If Google holds the winning bid, Verizon Wireless may trump it in the next few rounds, but after that, the contest for that license may ground to a halt until another bidder becomes interested in the spectrum. If Google is legitimately interested in the spectrum, however, the battle could continue, albeit more slowly.

See Telephony’s Unfiltered Blog for regular updates on the 700 MHz auction’s progress.