The Wall Street Journal-20080201-Opening Bid Set in Airwaves Auction

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Opening Bid Set in Airwaves Auction

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WASHINGTON -- An unidentified company bid $4.7 billion yesterday for a chunk of airwaves in a government auction, setting up the possibility that consumers will someday be able to access a mobile- phone network that is open to any device and software application they choose.

Consumer groups cheered the development, which is widely believed to have been triggered by Google Inc.

The search giant convinced the Federal Communications Commission to impose so-called open-access rules on the winner and is believed to have bid up the airwaves to make sure the rules are imposed.

Requiring the winner to open its network could eventually add pressure on wireless carriers to open their existing networks to more outside products, consumer advocates hope.

Bidding in the auction is anonymous so it won't be clear until the auction is over in several weeks which companies have been competing.

Auction watchers believe Google and Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, have been involved. The companies aren't allowed to comment while the auction is ongoing.

"This is an important transformation for the auction and for the wireless industry," said FCC chairman Kevin Martin, who has been criticized by the wireless carriers for advocating the open-access rules.

With overall bidding surpassing $15 billion yesterday, the auction has exceeded the $13.8 billion raised in the last major spectrum auction two years ago. "It will probably exceed any other auction that we have had in the past," Mr. Martin predicted.

The airwaves are attractive because their signals can travel across long distances and through buildings.

Mr. Martin and other FCC officials expressed satisfaction that so much money had been raised so quickly. But the auction hasn't been without problems, notably the lack of bidding on one significant segment of airwaves.

After 21 rounds, only one bid has been made on a block of airwaves designed to be shared with public-safety groups. The winner would be required to work with first responders to build a national wireless broadband network that could be used by police and firefighters. Excess capacity could be leased to commercial wireless providers.

But since no company has been willing to bid the $1.3 million minimum required to win the airwaves, it looks increasingly likely that the FCC will have to re-auction them after the rest are sold.

"I'm not ready to give up yet," Mr. Martin said yesterday. Yet senior FCC officials sound increasingly pessimistic about the chances of any company stepping up.

Several factors appear to have deterred interest, including requirements to work with public-safety groups on how the network would be built, an aggressive build-out plan and non-refundable multi- million dollar deposit.

The FCC gave itself wide latitude to change the rules if the airwaves aren't auctioned off. They could be re-auctioned without the rules requiring the winner to share its network with public-safety groups, although the agency may not be willing to go that far.

Yesterday, Mr. Martin reiterated his support for a public-private solution. The agency could reduce the minimum price or ease some of the build-out rules.

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Corey Boles contributed to this article.