http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a0jloTW0QDe8

With the recent FCC auction of the 700 MHz band fetching bids that total to more than $19 billion, one has to ask exactly how much is a nationwide wireless network worth, and who can afford it? In rules specified by the FCC before the auction’s start bidders are to submit confidential bids in series of rounds. At the end of each round the highest bid is revealed but the bidder remains confidential. In this highly public yet somewhat secretive auction the stakes are huge with many technology behemoths such as AT&T, Verizon, and even Google vying to win a coveted piece of the wireless spectrum. How have these companies gone about deciding how much to bid and what drove the prices to exceed the government’s original predictions by as much as $7 billion?

In this type of silent auction theory might suggest that a bidder’s best strategy should be to simply bid their true value of the goods up for auction. In this case the true value of a wireless spectrum can vary greatly from company to company. Verizon and AT&T, two natural bidders that they are seeking to extend their already national wireless networks, can obviously derive a lot of value out of the 700 MHz band. However, another closely watched bidder, Google, does not have as transparent goals in this auction. Google publicly announced before the auction that they would bid on the coveted C-block of the spectrum until the bidding surpassed the $4.6 billion threshold that the FCC set for triggering open-access provisions. However, outside of this stated goal, the potential value of a wireless network for Google may be limited and as such Google may not be truly interested in bidding to win but rather bidding to raise the price.

Google’s presence in the auction probably affected the actions of all the other bidders. The significance of this impact however, will not be known until all the bids are set and the winner is announced in the following weeks.