700 MHz: The $19.6B Question

Now that the Federal Communications Commission (FCC) 's quiet period rules have elapsed, it is finally becoming clear how the 700 Mhz wireless broadband spectrum winners will use their new bandwidth, and what went on behind the scenes in the lengthy bidding process for the $19.6 billion auction.

As Unstrung reported Thursday night, AT&T Inc. (NYSE: T) and Verizon Wireless have both confirmed they will use the spectrum for so-called 4G services using the Long-Term Evolution (LTE) specification from the 3rd Generation Partnership Project (3GPP) . The 700 MHz spectrum, which is becoming available as analog TV broadcasts move to digital, is considered excellent for broadband applications because it offers long-range and excellent indoor coverage. (See AT&T & Verizon to Use 700 MHz for 4G .)

Google (Nasdaq: GOOG), meanwhile, copped to what many had long suspected: It deliberately bid up the C-Block spectrum so that the FCC's "open access" mandate would kick in. The search giant laid out its strategy in its blog:

Google's top priority heading into the auction was to make sure that bidding on the so-called "C Block" reached the $4.6 billion reserve price that would trigger the important "open applications" and "open handsets" license conditions. We were also prepared to gain the nationwide C-Block licenses at a price somewhat higher than the reserve price; in fact, for many days during the early course of the auction, we were the high bidder. But it was clear, then and now, that Verizon Wireless ultimately was motivated to bid higher.

This isn't the end of Google's interest in the regulation of wireless spectrum, either. The company says it will interject again when the FCC sets implementation rules for the C Block and re-auctions the unsold D Block.

AT&T, meanwhile, declared itself very happy with the B-Block spectrum it bought at auction for $6.636 billion. "The B Block was the most attractive, most valuable spectrum available, and it was the best investment for AT&T and our customers," said Ralph de la Vega, CEO of AT&T's wireless unit, in a statement. (See AT&T's Big Spend.)

The operator was also keen to stress that none of the C-Block bandwidth it bought from Aloha Partners LP for $2.5 billion is subject to the "open access" rules that come attached to Verizon's new spectrum in the same band. [Ed note: Although at the moment it is not 100 percent clear what those rules will exactly entail anyway.]

That's a turnabout from a few months ago, when AT&T was happy to promote its GSM network as open -- a statement that was "open" to interpretation. (See AT&T's Open Fire.)

Qualcomm Inc. (Nasdaq: QCOM), meanwhile, bought eight E-block licenses for $558 million and will use them to bolster its MediaFLO wireless TV service. These licenses will allow Qualcomm to cover large areas on the East and West Coasts, stretching from New Hampshire to Maryland and from Orange County to Northern California, respectively.

— Dan Jones, Site Editor, Unstrung

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