February 4, 2008 / 10:51 PM / in 10 years

UPDATE 2-New bids in key portion of US spectrum auction

(Recasts and adds analyst comment)

By Peter Kaplan

WASHINGTON, Feb 4 (Reuters) - Bidding on a key piece of the wireless airwaves being sold by the U.S. government started rising again on Monday after it appeared stalled at the end of last week, according to data released by the Federal Communications Commission on Monday.

A $4.71 billion offer made last Thursday for a nationwide package of the “C” block of wireless spectrum was surpassed by a combination of eight separate bids for regional pieces of the C-block airwaves that totaled $4.74 billion, according to the FCC, which is conducting the auction.

The bidders’ identities are being kept secret until the entire auction ends, under FCC rules. But analysts point to Verizon Wireless and Internet search leader Google as the most likely bidders for the C block.

“This could reflect a continued battle between two original bidders -- most likely Verizon Wireless and Google -- on the C block, or could represent an entirely different bidder or combination of bidders that are exiting the sky-high prices of (another) block,” analysts at Stifel Nicolaus said in a research note.

Bidding on the nationwide package of C-block airwaves stopped late Thursday and Friday. But on Monday, the FCC received new high bids for five individual regions of the C-block spectrum, pushing the combined offers for all eight regions above the bid for the nationwide package.

It was unclear whether the piecemeal regional bids on Monday had been put together by a single bidder aiming to acquire the entire block of spectrum or were offers from several different suitors, Stifel Nicolaus said.

The high bids cover the U.S. Northeast, Southeast, Central region, West, Alaska, Hawaii, Great Lakes and Mississippi Valley.

The single $4.71 billion bid last week exceeded the $4.64 billion minimum price set by the FCC and triggered a condition sought by Google Inc (GOOG.O) that would make the spectrum accessible to any device or software application.

Whatever company submitted the $4.71 billion package bid will have a chance to top the new high bids when the auction resumes on Tuesday morning.

    However, if last week’s high bidder was Google and it was topped on Monday by Verizon, Google may “fold its hand” and let Verizon acquire the C-block spectrum, Stifel Nicolaus said.

    Analysts have speculated that Google might be aiming to push the bidding far enough to trigger open access, rather than to actually win the auction.

    The C block is one of five groups of 700-megahertz spectrum being offered. The top bids on Monday totaled $18.82 billion for all five blocks, raising more money than any previous FCC auction.

    The 700-megahertz signals are valuable because they can go long distances and penetrate thick walls. The airwaves are being returned by television broadcasters as they move to digital from analog signals in early 2009.

    Other potential bidders in the auction that began Jan. 24 range from entrenched carriers AT&T Inc (T.N) and Verizon Wireless to possible new competitors like Google, EchoStar Communications Corp (DISH.O) and Cablevision Systems Corp CVC.N.

    Verizon Wireless is a joint venture of Verizon Communications Inc (VZ.N) and Vodafone Group Plc (VOD.L). (Reporting by Peter Kaplan; Editing by Tim Dobbyn, Gary Hill)

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