FCC auction may reshape telecom field

Perhaps the most expensive piece of electronic real estate in history goes on the auction block this month, and the prospect has big players – ranging from Google to Verizon Wireless – salivating.

On Jan. 24, the Federal Communications Commission begins the weeks-long process of auctioning off the 700-megahertz spectrum of frequencies now being used by UHF-TV stations for analog broadcasting. In February 2009, those stations will go digital.

Many see the spectrum as the foundation for a new generation of mobile electronic gadgets and services that could let people use their wireless phones for two-way videoconferencing, watching movies streamed to their hand-held units or accessing features yet to be conceived.

In some markets, it might even be deployed as a full Internet service, giving consumers another choice of providers.

Unlike traditional cell phone or Wi-Fi signals, the 700-MHz spectrum can sneak through concrete walls, foliage, heavy rain and other barriers to wireless reception.

"It's why you can get TV in your basement with rabbit ears," said Michael Calabrese, director of the Wireless Future Program at the New America Foundation, a Washington-based think tank.

The spectrum's penetration could help the FCC fetch as much as $20 billion at auction, experts say.

"This is the most important auction we've ever had," said Art Brodsky, a spokesman for consumer advocacy group Public Knowledge. "The spectrum is more robust than any slice we have seen before and it's more robust than any we will see for a while."

Adding to the allure, 700-MHz transmissions travel at least 10 times farther than cellular signals, meaning a 700-MHz network would require fewer radio towers than cellular networks.

Experts say the auction may be the last remaining opportunity for a single company to stitch together a nationwide wireless network capable of smoothly streaming video to mobile devices.

More than 230 companies have applied to take part in the auction, many of them seeking small bits of spectrum to establish local or regional networks.

Some, though, have bigger ambitions. Major wireless players such as Verizon and AT&T are sure to be flinging wads of cash around in an attempt to land nationwide coverage. But Google may get the most attention once bidding starts. It's a deep-pocketed, glamorous company with technical chops and a penchant for introducing new products.

"The incumbents are stuck in the old way of doing business, but Google isn't afraid to innovate," said Nadine Manjaro, an analyst with ABI Research, who said the company would make a formidable rival to Verizon, AT&T and others. "They would be able to offer new devices and services and functionality," she said.

It's not clear whether Google would build and run its own network, a costly proposition in a field where the company has little experience.

Instead, it might decide to partner with an existing carrier, or it might drop out of the bidding altogether.

But the Mountain View-based company is clearly interested in flexing its muscles. It lobbied hard at the FCC over auction rules and recently announced an open-source software designed to be used in cell phones.

That could help the company dominate Internet searches from cell phones the same way it has from PCs.

"We believe it's important to put our money where our principles are," said Eric Schmidt, Google's chairman and chief executive, in a prepared statement about the company's intentions to bid on the spectrum.

"No matter which bidder ultimately prevails, the real winners of this auction are American consumers who likely will see more choices than ever before in how they access the Internet," he said.

While nearly everyone expects new features and services, not everyone's happy about the rules that will govern the auction.

Google, for instance, wanted the FCC to require anyone operating a 700-MHz network to allow any device to access it, not just phones or other gadgets provided by the operator.

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