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Technology News

April 4, 2008, 10:40PM
Google says it won by losing
Airwave bidding to give consumers more options

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WASHINGTON — The highest bidder in the multibillion-dollar sale of prime airwaves disclosed its plans for the wireless spectrum Friday, and the most prominent loser explained why it was still a big winner.

A day after rules prohibiting participants in the government's online auction from discussing strategies lifted, Verizon said it would use the new capacity to roll out faster wireless Internet service by 2010.

Verizon outbid Google, paying $4.7 billion for one of the auction's biggest prizes, the coveted nationwide block of airwaves. For Google, the sale turned into a high-stakes exercise in gamesmanship.

The Internet company failed to land any of the nearly 1,100 spectrum licenses auctioned off. Still, its bidding helped push the swath bought by Verizon above the $4.6 billion minimum price set by the Federal Communications Commission.

Surpassing that threshold triggered new rules that forced the winning company to allow consumers to use any device or application on those airwaves.

One big beneficiary of those provisions: Google. It lobbied hard for them to ensure that people could access Google's maps and other advertising-supported applications in the growing mobile market.

Google kept bidding until it hit that minimum price and said it had been prepared to buy the airwaves. If it had won, Google probably would have partnered with another company to run the network.

But it never expected to succeed against large wireless companies such as Verizon, said Larry Adler, a product manager who helped run Google's wireless auction team.

The auction of airwaves being given up by TV broadcasters in February as they convert to digital signals raised $19.6 billion for federal coffers. Although the 54-day auction was completed last month, FCC rules prohibited participants from talking about plans for the spectrum, to prevent collusion.

Verizon Communications CEO Ivan Seidenberg said the $9.4 billion in total spectrum licenses won by the company's wireless unit, jointly owned with Vodafone Group, was "a transformative opportunity."

He played down the FCC's open-access conditions on a major portion of the spectrum it won, saying the industry was headed in that direction anyway. Verizon has pledged to let customers use any device or software program on its entire network by the end of the year.

But the regulations scared AT&T away from bidding on the open-access chunk of airwaves. It was second to Verizon, winning $6 billion in spectrum licenses, which it also plans to use for high-speed Internet service. But its executives said they didn't bid for the portion subject to the open access rules.



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