frontline2.jpgFrontline Wireless, the company started by former Federal Communications Commission Chairman Reed Hundt to offer new wireless telecommunications service after bidding on a pending wireless spectrum auction, has shut down after failing to raise enough money.

Frontline raised the $128 million needed for an initial downpayment required for the FCC auction. But it failed to raise $1.3 billion necessary for the FCC’s “reserve price” for the spectrum, according to the WSJ.

The auction of the valuable 700-megahertz bandwireless spectrum is being closely watched because it offers the chance for a new wireless player to emergeĀ  — outside of the telephone carrier oligopoly — which could shake up the slow-moving industry and spur innovation. The auction is scheduled for Jan. 26.

Frontline was backed by well-known Silicon Valley investors John Doerr of Kleiner Perkins and Ram Shriram, early backer of Google, among others (see our coverage here).

Still in the bidding are Google, Paul Allen’s Vulcan Spectrum (see story about his possible motives here ), Verizon Wireless, a joint venture of Verizon Communications and Vodafone Group, AT&T, Chevron, Alltel, MetroPCS and others.