Wireless Block C: Sold?

This morning, an entity bid $4.71 billion for an open-access chunk of wireless spectrum being auctioned off. That means that the spectrum will be sold. In fact, barring additional bids later on today, chances are, the bidder -- most likely, Verizon Wireless or Google -- will end up being the winner of the spectrum block.

A government auction of wireless airwaves just cleared a crucial hurdle. Early on Jan. 31, an anonymous entity bid $4.71 billion for block “C,” a chunk of the spectrum the Federal Communications Commission (FCC) is auctioning off. That amount meets and exceeds the minimum price the FCC has set for the spectrum block.

While the government is auctioning several pieces of spectrum, the wireless industry is particularly focused on the C block because the winner will have to adhere to strict requirements on how it’s used. In particular, the assets will need to be used to build what’s known as an open network, where any device sporting any application can be used. (That’s in sharp contrast to how most airwaves are used now; carriers exercise strict control over phones and applications allowed onto their networks.)

The FCC has never imposed an open requirement on a piece of spectrum before, and, until today, many analysts worried that few bidders will be interested in the C airwaves, in part because the winner will need to employ an untested business model to make such a network pay off.

Chances are, the block will, in fact, go to today’s winning bidder, believes Blair Levin, an analyst with Stifel, Nicolaus & Co. From the very beginning of the auction, there probably have only been two bidders for the block – and one of them can’t bid again, he says. “We believe the bidding for the C Block is likely over,” he wrote in a report dated Jan. 31. A chance of further bids down the road is very remote.

The government is disclosing the number of bids and the amounts, but not identities of bidders. The FCC will announce names of the winners when the auction ends some time in the next several months.

Levin speculates that the winning bid was placed by Verizon Wireless. None of the participants in the auction is allowed to talk to the press.