After getting the open-access provisions it was looking for in the FCC airwaves auction, observers are speculating that Google (NSDQ: GOOG) has bowed out of the bidding. Forbes suggests that there is likely enough demand for the airwaves that Google won’t end up owning the spectrum, but did its part in bidding the price up to a level that requires the new owner to abide by the open access rules it lobbied for. The open access rules require the network to allow any device and any application to run on it.
Since the bidding is anonymous, no one really knows who is left in the game, however. Forbes’ view: Verizon (NYSE: VZ) is the only one motivated and rich enough to still be bidding. The theory goes that Google likely bid $4.7 billion for the C block last week, which exceeded the $4.6 billion minimum bid that would ensure open-access provisions. Then, Verizon stepped in, and bid on a host of less expensive regional spectrum slices, making sure the total was greater than the highest bid. Forbes: “It’s a savvy strategy, because under FCC rules, if the regional bids top the bids for the C block, that block must be split up and apportioned to the highest bidder or bidders.”
Stifel Nicolaus analyst Rebecca Arbogast: “Verizon wants more spectrum to close the gap between it and AT&T (NYSE: T). … I’m reasonably confident that Google does not have the spectrum now.” Verizon owns 49 megahertz of spectrum compared to AT&T’s 75 megahertz.
It was only recently that Verizon Wireless came out in support of open-access networks, saying it would create a program that would allow outside devices and applications to run on its network.
Second phase: Bidding may begin to speed up today with the start of the auction’s second phase. Complex rules say bidders must begin to use 95 percent of their eligibility, up from 80 percent, according to the NYT. At the same time, the FCC reduced the minimum amount needed to raise a bid from 5 percent to 2 percent to encourage more active bidding. The auction will end when bidding dries up.
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