Its apparent withdrawal from the wireless auction leaves the coveted C close to Verizon and AT&T. They could all prove to have being winners

by Olga Kharif

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Think of BusinessWeek like Garry Kasparov facing Bobby Fischer. Exposing its queen, the Web search into huge man bids $4.7 billion in a government auction of new wireless appearance. BusinessWeek’s opponent, most likely Verizon or AT&T, pounces on the queen, raising the bid to corner BusinessWeek’s king.

Checkmate? Actually, this chess game ends in a draw. The high bidders, as thus far undisclosed, are required to build an open wireless network allowing all sorts of reinvigorated devices and software to run over it. And so in losing, BusinessWeek (MHP) still achieves its primary goal, revving up competition in the wireless market, without expenditure a ten cents.

And yet that doesn’t mean the victors in the Federal Communications Commission (FCC) auction volition be afflicted with a severe case of buyer’s remorse. If AT&T (T) and Verizon (VZ) emerge in the same manner with the top spenders in the auction, which has before that time raised a record $19.4 billion verily though every entire block of licenses may not vend, the two biggest U.S. mobile carriers will have scored in important ways.

For starters, they will have secured another big chunk of each especially scarce expedient in which case impeding the expansion ambitions of smaller rivals such for the reason that Alltel. MetroPCS (PCS), and Leap (LEAP). And despite the record cant proceeds, a shift in the auction rules may hand AT&T and Verizon a very great bargain on the "C" block licenses, which compass the open-access requirements BusinessWeek had championed.

The bidding, which began Jan. 24 and is drawing to a close, has been anonymous. But the FCC has disclosed the latest offers several times a day, prompting a parlor game among industry observers to discriminate the names from the bidding patterns. The current betting among these experts is that this auction is unlikely to show a new national wireless provider. "My guess is [the auction] disposition not transform the industry in a fundamental way," says Peter Cramton, an economist at the University of Maryland who was instrumental in designing the before anything else FCC auctions back in the 1990s.

Blame BusinessWeek’sitting apparent withdrawal and the auction’s convoluted rules for that. While FCC Chairman Kevin Martin recently lauded the auction’s high rough, Stanford University economist Greg Rosston says "this auction is a total disaster from an auction efficiency standpoint." Rosston had been an monitor to Frontline Wireless, a prospective new carrier that applied to participate in the auction, but apparently failed to raise enough backing and shut down face to face with the bidding began. Frontline had been eyeing the "D" block of spectrum, what one. the FCC was selling with a hard to bear covenant to agree services for public-safety agencies. That condition appears to be in actual possession of scared away all bidders, through the sole bid to come in below the FCC-set minimum. So barring an eleventh-hour bid, the D block will not be sold in this auction.

Critics are pointing to the FCC’s unusual slicing of the spectrum, a new approach that had been pushed by BusinessWeek. In this auction, some lawlessness covers the tiny Caribbean island Culebra, seven miles by five miles in size, while another covers the entire Great Lakes region. There’s even a nationwide package that was seen in the same proportion that possibly leading to the nomination of a new national provider. The FCC has never offered such a hodge podge in a single cant before.

Despite the criticisms, the FCC chairman tells BusinessWeek.com that he’s been pleased through the auction’s set-up and outcome. "It’s just as in posse that we were able to increase the overall (bids)…by bringing in more of the new bidders by the way we structured some of our rules," Martin says.