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Lawmakers accuse Google of gaming the spectrum auction

Congressmen say open-access rules Google pushed for in spectrum auction--that where triggered by its own bidding--may have discouraged bidding by others and cost FCC billions.

Several Republican lawmakers accused Google of gaming the recent 700MHz spectrum auction, according to a Bloomberg report.

Congressman Fred Upton, R-Michigan.

Google bid just enough to trigger open-access rules and stood by as Verizon Wireless outbid it by $30 million. Google urged the Federal Communications Commission to adopt conditions requiring whoever operates the network to allow any device or application to connect to it and vowed to bid at least $4.6 billion if the rules were adopted. Only two of the four rules were adopted but Google still bid $4.71 billion. Verizon ended up winning with its $4.74 billion bid.

But Representative Fred Upton of Michigan said at a House telecommunications subcommittee hearing on Tuesday that those open-access requirements may have discouraged more companies from bidding on the spectrum, known as C block.

"Google was successful in gaming the system," Upton said. The requirements "were a social engineering" experiment by the FCC that prevented the agency from raising billions of dollars, he added.

Upton's sentiments were backed by Representatives Cliff Stearns of Florida and John Shimkus of Illinois, who wondered whether the FCC had been "duped" by Google.

FCC Chairman Kevin Martin told the lawmakers that the rules weren't designed to prevent any bidding, but to make sure that consumers had more choice on the network.

Google has admitted that while it was prepared to win the spectrum, its main goal in participating was to ensure that the open-access rules were adopted. Consumers will now be able to access Google services (and ads) and use Android-based mobile devices on the network.

"Consumers were the big winner in the auction, not any company," Google spokesman Adam Kovacevich said in a statement. "This auction generated not only a record amount for the U.S. treasury, but also historic new rights for wireless consumers as a direct result of Google's bidding. By any measure, that's a huge success for consumers, and we're proud of our role in helping make that happen."