Google closer to mobile airwaves bid: sources

One strategy Google is considering is to bid on a chunk of airwaves known as "D Block" that would be shared with public safety providers, as well as the more flexible, open-access piece of "C Block" spectrum.

One source said Google has met with SirenCall, a company charged with managing public safety agency use of spectrum.

Google unveiled this month plans to offer software for building Internet-ready cell phones in an alliance of network operators and device and software makers. The first phones to result from it are due out in mid-2008, partners say.

Stifel Nicolaus analyst Blair Levin said Google is likely to apply to participate in the FCC auction and pay a required deposit later in December. Such moves would not guarantee it will submit a bid, but Levin thinks the company will do so.

Even if Google does bid, Levin said, it may not be designed to actually win the auction, but rather to make sure the FCC's minimum is met and the open-access provision stays in place.

John Hodulik, telecoms analyst with brokerage UBS in New York, said Google's entry into the highly competitive market will hurt the four big incumbents: AT&T, Verizon, Sprint Nextel Corp and Deutsche Telekom AG's T-Mobile USA.

But it could also prove painful for Google. He estimated it would cost an $8 billion to $10 billion more to build another nationwide wireless network, not to mention heavy capital spending to keep up with constant evolutions in the market.

Hodulik said such cost considerations could hugely depress Google's highly valued stock, which trades about 33 times what analysts, on average, expect it to earn next year. Google shares closed on Friday up $3.98, or 0.6 percent, at $633.63.

(Editing by Tim Dobbyn and Braden Reddall)