The Federal Communications Commission has confirmed that an auction of wireless spectrum for a public safety network in the US will still go ahead, despite the most likely candidate dropping out.

Startup company Frontline Wireless was planning to bid for the chance to set up a national wireless network, but has ceased trading after failing to raise sufficient funds.

The bidding process, which is due to start on 24 January, required an upfront payment of $128m (£65m).

"Frontline Wireless is closed for business at this time," said the company in a statement. "We have no further comment."

Frontline Wireless estimated the cost of building the national wireless network at $10bn. The minimum bid for the spectrum set aside for the public safety network is $1.33bn.

If no other bidders come forward, the spectrum may not be re-auctioned as it falls under different rules than the other blocks on offer.

The auction for the 700MHz band was sparked as TV broadcasts on that frequency will cease in February 2009.

Google has confirmed that it will bid for part of the available spectrum, while the auction was snubbed by cable operator Comcast.