Bidders offered $2.8 billion for various cell-phone frequencies on the first day of a widely anticipated Federal Communications Commission auction today. After additional rounds of blind bidding among more than 200 participants, the government said it expects to raise at least $10 billion from the sale.

The spectrum slices being auctioned are among the last likely to be available for some time, making them particularly valuable to companies seeking to enter the wireless business, add services, or expand. The frequencies became available as part of the transition from analog to digital television broadcasting.

Two rounds of bidding were completed today. The first drew $2.4 billion in prospective bids, according to the F.C.C., including a $1 billion bid for a 22-megahertz chunk of national spectrum. The second round raised the bids for the same set of frequencies to $2.8 billion, the commission said, including $1.2 billion for the 22-megahertz chunk of spectrum.

Three more rounds are scheduled for Friday, according to F.C.C. spokeswoman Chelsea Fallon.

The 22-megahertz chunk of spectrum is unique in that the winning bidder will have to let its customers use any cell phone or wireless device, not just the hardware sold by the company offering the service, as is now the case.

While this so-called open-access provision might make the frequencies less attractive to some bidders, it is believed to make them more attractive to a company like Google, which has expressed an interest in offering new wireless services without getting into the business of selling hardware at retail stores.

Whether Google was the high bidder, as some suspect, will not be known until the auction ends.

Companies participating in the auction, including Verizon Wireless and AT&T, submit their bids anonymously through a secure web portal at the F.C.C.'s website. Because the auction rules require anonymity, the identity of the winning bidder will not be revealed until the auction closes.

Bidders are also prohibited from discussing their bids publicly or with each other under the commission's anti-collusion rules. These rules are designed to prevent two or more companies from joining forces to keep the bids low or to otherwise try to rig the auction.

There will continue to be three rounds of bidding each day until a scheduling change is announced, Fallon said, adding that as the auction progresses, the number of rounds per day will increase and their duration will be shorter.

Fallon said that a 2006 spectrum auction took more than a month. By the end of that auction, which had about 100 bid rounds altogether, there were 10 to 12 rounds per day, each lasting about 10 to 15 minutes.

There are five spectrum blocks for sale, but all eyes are focused on the C block—the auction's main prize—which contains 12 spectrum licenses. The C block has an aggregate reserve price of $4.6 billion.

If the reserve price is not met, the F.C.C. will have to re-auction the spectrum.  

Google has been eyeing the C block as it moves to enter the wireless business with its new open-source mobile software platform, called Android.

But given that the company successfully lobbied the F.C.C. to allocate more than one-third of the spectrum for open access—in a move designed to give consumers more flexibility in choosing wireless phones and services—some have suggested that Google may not be bidding to win the auction.

If Google won the auction, the thinking goes, it would then have to spend as much as $25 billion over five years actually rolling out its network. Thus, having won F.C.C. approval of two key open-access demands, Google may now be simply bidding to lose.

The list of 214 approved bidders released by the F.C.C. includes Verizon Wireless, Google, Alltel, Cox Communications, Echostar, and Microsoft co-founder Paul Allen's Vulcan Spectrum.

In early December, cable giants Time Warner Cable and Comcast said they would not bid on the spectrum.

Also on Portfolio.com:

• Battle of the Cell Bands

---