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January 24, 2008

FCC Pulls in $2.4 Billion During First Round of 700MHz Spectrum Auction

By Mae Kowalke, TMCnet Associate Editor

The U.S. Federal Communications Commission (FCC (News - Alert)) kicked off Auction 73 Thursday, in which it is selling off sections of the 700MHz spectrum to the highest bidders. This spectrum has been used for analog TV but will be freed up next year as part of the transition to digital. Bidders on the spectrum view it as an opportunity to expand or start new wireless services.



 
In the first round of Auction 73, there were 1,849 bids totaling more than $2.4 billion. The auction will likely take about a month to complete and names of winning bidders won’t be disclosed until it’s all over.
 
Five spectrum “blocks” are on the table: A (698-704 MHz and 728-234 MHz), B (704-710 MHz and 734-740 MHz), E (722-728 MHz), C (746-757 MHz and 776-787 MHz), and D (758-763 MHz and 788-793 MHz). Collectively, the entire 700 MHz spectrum covers the analog TV channel range 52-69.
 
RCRWireless News reported that the commercial public-safety D Block license received a $472 million bid. The FCC has set a reserve price for the D Block, with minimum bid for second round of the auction set at $543 million. It is possible, given the bidding landscape, that this particular block may end up going unclaimed, RCRWireless said.
 
For the C Block, the FCC is offering eight regional licenses. Collectively, the C Block received bids of just over $1 billion, RCRWireless News said in its report. This particular block is being watch closely because the FCC has specified that if a $4.6 billion reserve price is met the licenses for this section of spectrum must be used for “open access.” Analysts have speculated that Google may drive the bidding up above that minimum number to ensure the open access license specification is met, but then walk away without bidding more and let the spectrum go to another bidder.
 
RCR Wireless News (News - Alert) said in its report that its likely AT&T Mobility and Verizon Wireless, the national two largest mobile carriers, will dominate Auction 73. Sprint Nextel (News - Alert) (which of late has been undergoing a variety of cost-cutting measures) and T-Mobile (News - Alert) are not participating in the auction.
 
Expressing a fear some analysts and advocacy/lobbying groups have been talking about for many months, Michael Cabalbrese from the Wireless Future Program and New America Foundation, commented in the RCRWireless News report: “An unfortunate combination of tight credit markets and bad policy choices is likely to result in the biggest incumbent wireless carriers acquiring the lion’s share of licenses in today’s big auction of TV band airwaves.”
 
Calabrese continued: “The FCC imposed multi-billion reserve prices on the spectrum, which will shut out all but the biggest companies, resulting in no new competition.”
 
That concern, of course, will largely be blown away if Google bids enough to ensure open access for the C Block. Only time will tell if that possibility pans out.
 
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INTERNET TELEPHONY Conference & EXPO East 2008 (ITEXPO (News - Alert)) is going on now in sunny Miami, Florida! For the latest show news, please visit Rich Tehrani’s blog.

 
Mae Kowalke is an associate editor for TMCnet, covering VoIP, CRM, call center and wireless technologies. To read more of Mae’s articles, please visit her columnist page. She also blogs for TMCnet here.

(source: http://internetcommunications.tmcnet.com/topics/broadband-mobile/articles/19200-fcc-pulls-24-billion-during-first-round-700mhz.htm)




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