Google Reveals Spectrum Auction Strategy

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Live From the Next Web (2008): Day 2

spectrum.jpgDuring the recent wireless spectrum auctions that just brought the FCC $19.6 billion in license fees, there was a lot of speculation about what drove each of the different corporate bidders. But the bidders themselves were barred from speaking publicly about their auction strategies. Now that Verizon has been declared the biggest overall winner, and the auction is over, the participants are free to speak. Google was potentially the big spoiler in the auction, but as it explains, the main motivation behind its participation was simply to ensure that some of the open rules it had lobbied for would be enforced on whoever won.

From the Google Public Policy Blog:

Google’s top priority heading into the auction was to make sure that bidding on the so-called “C Block” reached the $4.6 billion reserve price that would trigger the important “open applications” and “open handsets” license conditions. We were also prepared to gain the nationwide C Block licenses at a price somewhat higher than the reserve price; in fact, for many days during the early course of the auction, we were the high bidder. But it was clear, then and now, that Verizon Wireless ultimately was motivated to bid higher (and had far more financial incentive to gain the licenses).

In fact, Google raised its own bid in ten rounds without any counter bids, which implies that Verizon was doing everything it could to make sure that the open device and open application rules were not triggered. Ultimately, that strategy was not successful, and it must now abide by the open rules. It remains to be seen whether Verizon will abide only to the letter of the rules or to their spirit.

(Photo by Steve Jurvetson)

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