FCC Auction Bidding Tops $11.5 Billion

    January 30, 2008
    WebProNews Staff

The big prize, a slice of spectrum covering the US, has stalled at a bid of $4.29 billion, under the Federal Communication Commission’s reserve price of $4.6 billion.

Who blinks first in a standoff over the prized slice of spectrum? As the FCC uses an anonymous bidding process, including penalties for collusion to keep it anonymous, the progress of Auction 73 is a little less interesting than it could be.

Someone should eventually push the bidding for that block of spectrum, which will be freed with the digital television signal conversion in 2009, up and over the $4.6 billion mark. The minimum bid for the next round for this piece of the 700MHz spectrum will be over $4.7 billion.

As CNNMoney noted, open access conditions for this piece of the spectrum come into effect once the bidding passes $4.6 billion. Google proposed four openness conditions for the auction, offering to bid the minimum $4.6 billion if the FCC embraced all four.

But the FCC opted for the two less meaningful conditions – open applications and open devices – which in some ways the existing wireless telcos already permit. If Google wants all four conditions, the two mentioned along with open services and an open network, they will have to bid up the price.

The auction gets interesting here. Will Google up the bid? Last year, pundit Robert X. Cringely called Google’s interest a head feint, aimed at getting the FCC to impose conditions on a winner that Google could then enjoy for free.

If the bidding passes $4.6 billion, the wireless telcos like AT&T and Verizon may think Google has pushed the bid up to ensure it can enable those conditions. That could start more active bidding in earnest.

Right now it looks like everyone’s waiting for someone else to blink. It all comes down to how much value companies believe they will derive from winning the auction. If the 700MHz spectrum represents a shift in how people access online services, we’re pressed to see a limit on how valuable this auction may become in the future.

Here’s a crazy thought: what if the federal government decided it could be the one to benefit the most from the 700MHz spectrum? Instead of auctioning it, they turn it into a public works project, a 21st Century TVA, but with transmitters rather than electricity.

It won’t happen, since apparently the Feds have already spent the money being raised in the auction. Too bad, really, as it seems from the news the US economy could use that kind of boost to the workforce, amid outsourcing of manufacturing and tech jobs abroad.