Spectrum Bidding Heats Up

February 6, 2008
Lexero LLC

 

The bidding war for radio spectrum that is being freed up by
the elimination of analog television broadcasting continues to attract
attention by major technology firms. You can see a map of the spectrum range here.

 

Several blocks of spectrum in the 700-MHz range have to date
attracted bids of $18.9 billion, well in excess of the FCC’s goal of $10
billion. Of particular note, the C Block, the largest swath of airwaves up for
auction reached its minimum reserve price of $4.6 billion. This now means that
the airwaves must be used to build an open network, allowing the operation of
numerous devices and applications, compared to the current method of wireless
providers defining the types of phones used and the services provided.

 

While the bidders are anonymous, speculation indicates that
Google and Verizon Wireless are the primary players, though few expect Google
to invest enough to win. Google may have posted the minimum bid for the C block
to ensure the open network, which the firm heavily supported.

 

The money invested in this spectrum is certainly not a lost
investment. Regardless of the final price, winners of this band of spectrum
will easily recoup their investment and then some as higher bandwidth mobile
applications begin to explode.

 

Google is also a likely winner here. While we don’t know if
it placed the minimum bid to ensure open access or not, it is very likely that
there will be an even higher bid submitted by a player other than Google. In
that scenario, Google get what it wants while avoiding actually making any
investment at all. This is a shrewd move that would position it in future
battles with the proposed Microsoft/Yahoo conglomerate.


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