NEW YORK (WiMAX Day). With less than ten days until the auction of 700 MHz spectrum begins in America, the field of leading contenders has shifted, with much less certainty in the end game.

The Federal Communications Commission (FCC) yesterday announced a quixotic lineup of 214 approved bidders – big and small, known and unknown – that will take part in the January 24 auction of five blocks of spectrum.

Not on the list of bidders was Frontline Wireless, a start-up backed by Silicon Valley investors and headed by Reed E. Hundt, a former chairman of the FCC. Frontline initially drew interest as an outspoken and fiery contender for the spectrum, but then drew just as much interest earlier this month as it became a fizzle-fast auction dropout.

Frontline had been explicit over its intentions for the spectrum. “We are bidding to build out a 4G network to meet the needs of public safety and other customers.”

With considerable management expertise and investor backing, Frontline looked like it would make good on its intentions. However the company was unable to secure the necessary funding that would permit it to pursue the spectrum.

As Frontline made its way to the exit, a new and unexpected bidder emerged, led by Microsoft co-founder, Paul Allen, at the helm of Vulcan Spectrum.

Whoever walks away with the 700 MHz spectrum, one thing is clear: it will be costly to acquire as the minimum bidding price is US$4.6 billion, and the final bid may climb as high as $15 billion. Some say it will cost as much to construct a national network.

Will bidders such as Google spend such an amount? One observer maintains that, for Google, participation in the auction is a strategic move, and not about spectrum.

Known as a catalyst for innovative business models, Google successfully in petitioned the FCC to mandate that the C-block be restricted for open access, where any device or application can access to the network. That was a victory in and of itself.

If Google proceeds with a winning bid, it can build a network, use it for industry leverage, or lease spectrum out to other operators.

Analyst Greg Sterling of Sterling Market Intelligence, is one of those who doubt Google will go the whole nine yards. “Given those costs, I would be surprised if Google builds out its own network alone, or at all,” he told WiMAX Day. “However, there are various scenarios where Google shares the cost or licenses the spectrum to interested third-parties with existing infrastructure, and gets access as part of the deal.”

Blair Levin, former FCC chief of staff and now analyst with Stifel Nicolaus, noted another variant. “I believe that Google will focus on bidding on the C block, though in early rounds they may bid on other blocks,” he told WiMAX Day.

Speculation and debate, meanwhile, continues over the key heavyweight contenders AT&T and Verizon Wireless. Both companies are key industry players anxious to maintain their supremacy. Both carriers also fear being left behind without a mobile broadband network, as rival network Sprint is far advanced in its national WiMAX network.

Yet such ambitions are considerably more risky, as Sprint already owns its spectrum, so the economics are in their favour.

Analysts generally agree that AT&T will bid “aggressively” in the auction. What does that mean? Last year, AT&T acquired a massive amount of 700 MHz spectrum from Aloha Partners for $2.5 billion, so why will they bid for more. “They might want to horde spectrum to keep the bandwidth out of the hands of Google,” Sterling speculates.

Sterling also believes that AT&T might run up the bidding to the highest price. This would cause rivals to quickly exhaust their own war chests.

“The prospect of Google over-extending itself financially is perhaps a scenario that Verizon and AT&T relish,” he said, “because they are fairly terrorized by Google’s growth in the market, especially AT&T.”

Levin, meanwhile, believes that its likely Verizon will walk off with C-block spectrum. “Verizon has a greater need for spectrum than AT&T, and I would note that Verizon has focused a lot of attention in lobbying on the rule affecting the C-block.”