Who Won the C-Block of 700 MHz?

The national C-block of 700 MHz auction hit $4.6 billion yesterday. Reportedly, the bidding price was $4.7 billion, just $100 million over FCC’s reserve price. Although the news came at no surprise because Google announced it harbored just $4.6 billion before the auction, the win represents a stride for a proposed “open access” mobile network in the U.S.

Just for some background information, despite early opponents, Google had successfully lobbied the FCC for the “openness principles” including open application and open device attached to the current auction, debating that they will result in a proliferation of better wireless Internet services for American mobile users.

The interesting and critical question right now is who won the C-block? It is like we watched a good movie without knowing the ending. No one but the FCC knows at this point because the agency decided that the bidders’ identities will remain secret until after the auction closes. But we have the right to guesstimate, don’t we? The winner must simultaneously have three characteristics:

1. A deep pocket to pay $4.7 billion for the spectrum, or at least having enough credit to leverage the payment
2. It must be motivated enough, or even desperate to hold the spectrum
3. It must be confident or experienced to assemble an ecosystem of network gear vendors, mobile device manufacturers, CE manufacturers, software developers and financial community to support the open access network

Google, AT&T and Verizon are the usual suspects among the bidders. I think, however, AT&T and Verizon, especially Verizon, are more likely to be the winner. Why? For Google, at this point we don’t know much about its plan except its determination to ensure the open-access rules. Does it really want to build a network or just grab a large piece of mobile advertising and mobile services market by forming wide partnerships? On the other side, both AT&T and Verizon have all the motivation and ability to build a national 4G network. But, AT&T already paid $2.5 billion last year for Aloha’s 700 MHz spectrum that covers 196 million populations. Will it splash $4.7 billion again to beef up its 700 MHz assets? It may, but I doubt. While Verizon initially opposed the open-access rule, its CTO acknowledged that 700 MHz is optimal for its 4G LTE network because of its physical merits. And, it may have sanely realized, learning from Facebook maybe, an open ecosystem could be beneficial to everyone.

If Verizon is the likely winner and AT&T already has some assets in its barn, what about the other two mobile operators – Sprint and T-Mobile? Well, Sprint just joined hands again with Clearwire to set up a national WiMAX network, which champions an open network. Its new CEO is also working on some major deals and reconstructions that hopefully will push the Xohm project forward rapidly. The smallest of the four, T-Mobile needs to hurry up on its mobile broadband network construction. True, its operational results look good so far thanks to smart marketing, fixed-mobile convergence initiatives and superb customer service. But, its long-delayed 3G network may squeeze it into sidelines when all the other three become entrenched in mobile broadband offerings. Someone may argue that a late comer could potentially enjoy the benefits of heightened consumer awareness of advanced data services, more mature ecosystem and cheaper devices. Yet, even taking these factors into account, T-Mobile may still fight not to become the child left-behind.