The 700 MHz spectrum may not be the only wireless band Google is interested in. The U.S. Federal Communications Commission on July 31 said that a prototype device built by Google, archrival Microsoft, and other technology companies doesn't work as promised.

The companies, which use the name White Space Coalition and also include Dell, Earthlink, Hewlett-Packard, Intel, and Philips Electronics North America, responded to an FCC invitation late last year to build prototype portable devices that might operate in TV channels' so-called white spaces. The white space is a portion of a spectrum band that a TV broadcaster doesn't use. The exact location of the white space may differ, depending on what city you're in.

The FCC had previously said that it will allow the use of wireless devices in that spectrum as long as they are fixed. But it also said that it would consider allowing unlicensed portable devices to use the spectrum.

The devices submitted by the White Space Coalition were designed to sniff for broadcasts in spectrum before transmitting in the band, to avoid interfering with the TV signal. But the FCC found that the devices do not consistently sense or detect TV broadcast signals and in fact, sometimes could cause interference to TV broadcasts.

However, the FCC also noted that it recognizes that the prototypes represent initial efforts and so the agency is open to the possibility that future devices could perform better.

Despite the bad news, the White Spaces Coalition took a very upbeat perspective on the report. In a statement, the group said it is "encouraged that FCC engineers did not find fault with our operating parameters and remain confident that unlicensed television spectrum can be used without interference."

Using the TV white space isn't the only wireless interest from Google. The search giant has been lobbying the FCC to alter the rules around an upcoming auction of 700MHz spectrum. The FCC complied with some of Google's requests but not all. Google said it will examine the FCC's report on that matter before deciding if it will participate in the spectrum auction.

If market rumors are to be believed, Google is taking a special interest in wireless spectrum because it may be developing a mobile phone.