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Auction 73 Update: A Crucial Day for Google

Posted by: Olga Kharif on January 30, 2008

It’s crunch time in the government’s auction of wireless airwaves, and what goes down Jan. 31 could make-or-break chances for the creation of a new nationwide mobile-phone network in the U.S.

The Federal Communications Commission is auctioning off several chunks of airwaves, but the industry is especially transfixed by the fate of the “C” block. According to FCC rules, that slice is one of only two blocks that can be used to build a coast-to-coast network. Trouble is, the other block has lately had no takers. And the C block won’t make it off the auction block if the government doesn’t receive a minimum bid of $4.6 billion, pronto.

Problem is, after almost a week of bidding, only a couple of entities – likely Google and Verizon Wireless — have expressed an interest in C, believes Blair Levin an analyst with Stifel, Nicolaus & Co. and FCC auction data, and none of them has, so far, been willing to cough up that amount. Worse, no one has bid for block C at all during the last three rounds on Jan. 30. Because the FCC has stringent auction inactivity rules, the last day of January is crucial.

Bidders who don’t participate in a certain number of rounds will get disqualified. While bidders can use waivers to skip some rounds, Levin believes that at least one block C bidder may run out of waivers tomorrow. If that’s the case, and that company doesn’t place new, higher bids -- in other words, if the FCC’s $4.6 billion minimum price isn’t met and exceeded tomorrow – it could be that there will be no takers for block C, either.

Chances of the block having to be reauctioned will go up dramatically. Chances of a new, open wireless network rising up will plummet.

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Reader Comments

iPhone Lover

January 31, 2008 12:07 AM

it's just too expensive. The government should lower down the minimum bid in order to entice more participants.



January 31, 2008 12:22 AM

You missed a possibility: the other bidder has already dropped out, and the current winner is just waiting for the minimum increment to fall until they can bid exactly 4.6 billion. (From what I've read so far, bidders may raise their own bids.)


January 31, 2008 01:05 AM

I am confused....

Mark Wright

January 31, 2008 02:37 AM

Since C block and the other block will both expire without the minimum bid. That means the minimums are to high now thus will be reduced at the next auction.
Since both of the blocks work for nationwide, it becomes more likely at the next auction that in Fact there could be 2 new players that may be interested then.
Also keep in mind the blocks are pricey enough that it makes more sense for most anyone to do a nationwide satelite system...and leave the govt out altogether.


January 31, 2008 11:18 AM

Looks like it just passed 4.6: pwb: $4,713,823,000. minimum bid for next round: $5,271,090,000

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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