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214 bidders are cleared for U.S. airwave auction

The FCC says AT&T, Verizon Wireless and Google are among the companies qualified to participate in the sale.

January 15, 2008|From Bloomberg News

AT&T Inc., Verizon Wireless and Google Inc. won clearance Monday to bid for airwaves in a U.S. government auction next week, a sale that aims to spur advances in mobile phones and may raise as much as $15 billion.

Vulcan Spectrum Management Inc., the company backed by Microsoft Corp. co-founder Paul Allen, and MetroPCS Communications Inc. also are among the 214 qualified bidders, the Federal Communications Commission said.

The auction pits AT&T and Verizon, the two biggest U.S. wireless carriers, against newcomers such as Google, which wants to sell more advertising on phones. Wireless carriers plan to use the spectrum to offer more high-speed data services, such as video and music downloads.

Frontline Wireless, a start-up that sought to build a nationwide network shared with public-safety agencies, was among 27 companies that didn't qualify to bid, the FCC said. Frontline, whose founders included former FCC Chairman Reed Hundt, shut down last week.

The FCC will start the auction of almost 1,200 spectrum licenses Jan. 24, according to the notice. Companies can place bids through the FCC website or by telephone.

There will be two bidding rounds on the first day of the auction and three rounds the second day. FCC auctions of this size typically last weeks, with the number of daily bidding rounds increasing as low bidders drop out and the pool of auction participants shrinks.

The FCC plans to announce the highest bid amount for each license at the end of every auction round, without releasing the names of the bidders. Companies that don't place the highest bids will have a chance to top those offers in later rounds. Bidding will continue until there are no more offers for any license.

The FCC will conduct a "mock auction" Jan. 22 to let qualified bidders familiarize themselves with the bidding system.

About a third of the spectrum will be subject to so-called open-access rules, as long as bids reach at least $4.6 billion. The rules, favored by Google, require the winning bidder to open the airwaves to any legal device or program. U.S. wireless carriers now typically control which devices connect to their networks.

Mountain View, Calif.-based Google, owner of the most popular Internet search engine, may offer $4.6 billion just to ensure that the open-access rules take effect, then let another bidder top its offer, said Stifel Nicolaus & Co. analyst Blair Levin.

Verizon Wireless, jointly owned by New York-based Verizon Communications Inc. and British-based Vodafone Group, has the best chance of winning the open-access airwaves, Levin said.

Still, "Google could surprise us" by emerging as the highest bidder, Levin said. That's because the company "has the financial resources to do whatever it wants," he said.

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