Verizon turned out to be the biggest spender at the recently concluded 700 MHz wireless spectrum auction, out-bidding even Google. They spent an estimated $9.6 billion to buy over a large chunk of the spectrum that was auctioned by the FCC.
Traditionally the 700 MHz spectrum was used for television broadcasting. On 19 Feb 2009, the TV channels using this spectrum will be turned off and transmitted via set-top boxes, and usage of the spectrum will be handed over to Verizon. GigaOm provides a good explanation of the history of this part of the wireless spectrum
Increased coverage and better penetration through walls make the 700 MHz spectrum attractive for Verizon, who will use it to cut costs and achieve greater nationwide coverage in the United States. Verizon will now be able to reduce their roaming cost by having their own towers in rural areas, and they will also be able to provide DSL-like service to rural areas.
AT&T was another big spender, paying about $6 billion at the auction, in addition to their prior purchase of Aloha Partners’ 12MHz of spectrum, which covers 196 million people in the U.S.
Before the spectrum was auctioned Google convinced the FCC to set up openness standards for the winner of this block. Their lobbying efforts resulted in the FCC setting standards that allow users of the 700 MHz spectrum to attach any device and allow access to any applications that donâ€™t harm the network.
The search giant’s interest in this auction was mainly to ensure open standards would be maintained, which will be very useful once their Android platform is in use.
Google had also shown a strong interest in the spectrum and had bid on it. They were possibly discouraged from heavier bidding due to investor concerns about their stock price and fears of Google moving away from search operations, which are the mainstay of the company.