Bids rise in airwave auction

The Federal Communications Commission (FCC) took second-round bids totaling $2.78 billion in an auction of airwaves that would let carriers offer faster Internet access on mobile phones.

The value of bids rose 15 percent from a previous round, the FCC said Thursday on its Web site, without revealing which companies made offers.

The largest slice of spectrum, known as the C-block, drew an offer of $1.24 billion. The government expects the auction to raise as much as $15 billion in total.

AT&T, Verizon Wireless and Google are among 214 companies vying for 1,099 slices of spectrum that will become available when television broadcasters move to digital signals in 2009.

The airwaves are ideal for mobile Web access because they can travel long distances and easily pass through walls.

If bids for the C-block airwaves reach $4.6 billion, the buyer must open the network to any legal mobile device or program.

It will probably take until the middle of next week to determine whether the bids will go that high, Stifel Nicolaus analyst Blair Levin said Thursday in a note.

Starting today, the FCC will hold three bidding rounds per day, giving companies a chance to top offers of previous rounds.

The highest offers will be announced after each round, though not the names of the bidders.

The final winning bids will be revealed after the auction ends in more than a month.

AT&T and Verizon Wireless, the two largest U.S. mobile- phone providers, are likely to be the auction's biggest winners, said analysts including Credit Suisse's Christopher Larsen in New York.

The two carriers may spend as much as $5 billion each, Larsen said Wednesday in a note.

Google, which lobbied the FCC to adopt the open-access rules for the C-block, probably will bid at least $4.6 billion to ensure they take effect, Larsen said.

Opening the C-block to more devices would help Google sell more advertising on phones by expanding consumers' access to mobile Web content.

Google, owner of the most popular Internet search engine, may then let AT&T or Verizon top its offer because it may not want to actually win and build a nationwide wireless network, Larsen said.

The C-block covers all 50 states.

One bidder offered $472 million in the opening round for a separate slice of airwaves, whose buyer would be required to build a nationwide network that public-safety agencies would share with commercial carriers.

There were no higher bids in the second round for those airwaves, known as the D-block.

"It is too early to know whether this is a serious bidder," Levin said of the D-block bidder.

Frontline Wireless, a Silicon Valley-backed company that wanted to buy the public-safety airwaves and build the network, closed down this month. Frontline, founded by former FCC Chairman Reed Hundt, couldn't meet a required down payment, Levin said.

Frontline spokeswoman Mary Greczyn declined to comment.

FCC Chairman Kevin Martin said Jan. 15 that he's still optimistic that the auction will create a national high-speed wireless network to improve emergency communications during disasters such as terrorist attacks and hurricanes.

If bids for the D-block license don't reach $1.3 billion by the end of the auction, the FCC may modify the public-safety conditions and put it up for sale again.

Other bidders include Seattle-based Vulcan Spectrum Management, backed by Paul Allen; cable-TV provider Cox Communications; and Arkansas-based phone company Alltel.