Is Google an active bidder in the ongoing 700-MHz auction or a c-block puppet master?

Despite a pledge last summer from the search engine giant to dole out $4.6 billion on the spectrum auction, recent bidding patterns suggest that Google has pulled back now that c-block open-access requirements have been met so that rivals like Verizon and AT&T can duke it out--and fund the inevitably pricey buildouts.

"The conventional wisdom is that Google's primary goal is to ensure that the $4.6 billion reserve price is met, so that the open access conditions are binding on the winner, but that they have little desire to own spectrum or operate a network," said Michael Calabrese, director of the Wireless Future Program at the New America Foundation.

"Google's primary interest was that the openness provision was met," said Blair Levin, a telecom analyst at Stifel Nicolaus. Having accomplished that goal, there's no need for them to actively bid on a system that will require expensive build-outs, he said.

At issue is a portion of spectrum in the 700-MHz band that will become available once television broadcasters shift from analog to digital signals in early 2009. A group of 214 approved bidders, including Google, Verizon and AT&T, have been bidding on the spectrum since January 24, and that auction will continue until there is a round in which no bids are placed.

Under pressure from Google, the FCC agreed last year to require the winner of the c-block licenses to make it open to all devices and applications provided the bidding reached a reserve price of $4.6 billion. Bidding for the c-block topped $4.71 billion last week, and then died down, prompting speculation that Google had been slowly inching its way toward the reserve price.

Bidding on the c-block began anew on Monday, however. It's a bit complex, but basically bidders for the c-block can fight for the spectrum in two ways: bid on one, large package that covers all 50 states or bid on eight, separate regional c-block licenses. If bidding on the regional licenses is higher than the 50-state package at the end of the auction, the FCC will sell the spectrum in chunks. If the 50-state package bid is higher, it will be sold in its entirety to the winning bidder.

Until Monday, c-block bids were being placed on the 50-state package, but bidding suddenly switched to regional bids this week, suggesting that Google rival Verizon might be getting in on the action. As of round 42 on Thursday morning, no additional bids had been placed on the c-block (or the struggling d-block, for that matter), so things could be dying down.

"It's quite possible the aggregate c-block bids will rise, if Verizon has competition concerning particular regions; but I doubt that Google would continue bidding much above the current $4.7 billion high bid for c-block nationwide," Calabrese said.

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