Google Iffy About Bidding in FCC Auction

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Google Tuesday was noncommittal about jumping into a major federal spectrum auction moments after the Federal Communications Commission adopted bidding rules that were partly designed to elicit a multibillion-dollar investment from the Internet-search goliath.

“Under the current circumstances, we’re going to need some time to carefully study the actual text of the FCC’s rules, which are due out in a few weeks, before we can make any definitive decisions about our participation in the auction,” Richard Whitt, Google’s Washington telecommunications and media counsel, said in a press call.

The FCC voted 4-1 to establish ground rules for an auction expected to reap the U.S. Treasury at least $10 billion. Although the auction has to begin by Jan. 28, 2008, the spectrum won’t become available until Feb. 17, 2009, when the country’s TV-broadcasting system converts from analog to digital transmission.

Google promised FCC chairman Kevin Martin that the company would bid $4.6 billion if the FCC adopted four auction conditions. Although the agency agreed to two, it refused to require auction winners to function as wholesalers or to interconnect their networks with third-party Internet-access providers.

The FCC is selling 62 megahertz of spectrum in the 700-MHz band -- a highly desirable slice of the airwaves that can easily transport mobile-video services and applications to end-users located dozens of miles away in hard-to-reach places like basements and elevators.

On 22 MHz of the spectrum -- which is expected to go to one national provider -- the licensee must allow consumers to use any handset and download any application, a policy intended to break carriers' alleged service-handset domination of the consumer base.

Martin, denying that these were network neutrality mandates, said the conditions were necessary because consumers were forced to junk handsets when changing carriers and barred by carriers from downloading applications. FCC Republican commissioner Robert McDowell dissented, his first on a major issue since joining the FCC in June 2006.

Free-market advocates continued to hammer Martin for not backing an auction that sold the airwaves to the highest bidder without conditions.

"I commend McDowell for sticking to free-market principles and dissenting from Martin's wireless network-neutrality mandate,” said Rep. Joe Barton (R-Texas), the most senior Republican on the Energy and Commerce Committee. “The FCC's decision to rig the 700-MHz auction at the suggestion of companies such as Google will harm wireless service and rob taxpayers.”

Some of the spectrum to be sold must be used to build a national network to be shared by public-safety organizations in an effort to ensure that the first responders from multiple jurisdictions can easily communicate at a crisis.

In the commercial arena, the 22 MHz will be sold in 12 regional parcels under rules designed to allow one bidder to acquire all 12 and form a national footprint. If the FCC fails to obtain about $4.6 billion for the 22-MHz bidder, the auction is canceled and a second one will be held without the open-network conditions.

FCC Democrat Michael Copps, disappointed that Martin would not agree to more of Google’s demands, said that if the $4.6 billion reserve price isn’t met, then the FCC would have failed to provide cell-phone users with more choice.

“The end result would be: same old, same old,” Copps added.

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