Why the FCC's 700Mhz auction matters

The Federal Communications Commission's auction of 700 Mhz wireless spectrum can easily be portrayed as a he said, she said fiasco. But the bigger picture is worth watching.

Google dangles $4.6 billion to prod the FCC to opening up wireless spectrum. Verizon agrees sort of. AT&T doesn't. Everyone wonders what Google is planning.

Frankly, it's all a bit hard to follow and the open access debate looks like a smoke screen. Nevertheless, the auction is proceeding as the FCC laid some groundwork to begin the auction process.

So why does this auction matter? Here are a few answers.

1. The auction is one of the FCC's largest and could fetch anywhere from $10 billion to $15 billion. What's really going to be interesting is the bidding war that's likely to erupt between Verizon, AT&T, Google and potentially eBay and even Comcast.

2. What is 700 Mhz spectrum? Analog TV broadcasters currently use most of the spectrum to deliver programming. However, these TV stations are required to go all digital in 2009. That opens a lot of signal for wireless companies. Another wrinkle: 700 MHz signals go farther from the base station than other spectrums.

3. New network buildouts. Bear Stearns analyst Philip Cusick reckons that AT&T and Verizon are likely to use the newly opened spectrum for so-called "4G" services. Despite gripes about wireless broadband today, it's quite an engineering feat considering how bandwidth constrained wireless carriers are. Google wants spectrum for some undisclosed reason, but rest assured there's a big advertising play there somewhere. Ultimately insurgent bidders want to offer alternative services to walled garden set up we have today with wireless carriers.

4. Public safety matters. The FCC is allocating 24 MHz of the 700 MHz being auctioned to a public safety network. The rub: There are no plans on how to use this spectrum. The general idea is to create a national public safety network.

5. Open access is now on the table. Google's FCC lobbying isn't likely to result in the search giant getting all of its requests: Open applications, devices, services and networks. But FCC Chairman Kevin Martin has indicated he's receptive to some of those ideas. Open access is now on the table and Google may get some of what it wants. It remains unclear whether Google will bid.