WASHINGTON-Unison Spectrum L.L.C. and Space Data Spectrum Holdings L.L.C. posted the highest bids at the end of round eight in the government’s air-to-ground auction of in-flight broadband services spectrum.
The Federal Communications Commission is auctioning four megahertz of spectrum in the 800 MHz band used today by Verizon Airfone Inc. for air-to-ground voice communications. The commission earlier decided that the spectrum was underutilized and that it would be auctioned. The agency is using a new procedure to ensure that no one entity or its affiliates control all four megahertz by allowing companies to place bids on specific licenses. These licenses correspond to one of three band plans. At the end of each round, the band plan with the highest bids wins, along with the bidders for the respective licenses.
The winning band plan at the end of round eight was option No. 3. Unisom Spectrum bid more than $200,000 for one megahertz and Space Data Spectrum Holdings bid more than $4.5 million for three megahertz.
Activity on round nine was suspended.
The FCC last week officially dismissed the application of AirCell Inc. to participate in the auction as AirCell had signed an official purchase agreement of AC BidCo L.L.C. AC BidCo had been associated with AirCell but the final legalities were not finished until just before the start of the auction. Since FCC rules prohibit the same company or affiliates from owning all four available megahertz, AirCell was forced to drop out. AirCell had applied to participate in the auction as a small-business entity. AC BidCo does not qualify as a small business because, in addition to backing from AirCell, it has venture-capital backing.
Other qualified bidders include: Verizon Airfone, AMTS Consortium L.L.C., Intelligent Transportation & Monitoring Wireless, WorldCell Inc. and JetBlue’s LiveTV L.L.C.
Verizon Airfone, the only licensee offering service in the band today, must vacate the band by May 2010. If Verizon Airfone wins the auction, Verizon Airfone must detail its transition from existing operations to the new band plan.
Boeing Co., which operates the Connexion satellite-linked in-flight broadband service, is not participating in the auction.
Since the FCC is auctioning the air-to-ground spectrum, which is already used for communications while in flight, potential interference concerns with cellular use is not a factor. The use of transmitting devices that work outside the ATG band-such as phones that operate over cellular networks-must be approved by the Federal Aviation Administration.
Once winning bidders buy the spectrum licenses from the government, they must convince the domestic airline industry that it can afford to offer in-flight broadband even as the airline industry continues to try to cut costs in the wake of high fuel prices.
The prospect of passengers chatting on trans-Atlantic or cross-country flights has some flight attendants and passengers concerned, but federal regulatory agencies-the FCC and the FAA-to date have only focused on interference concerns when addressing in-flight cell-phone use. Citing safety concerns and passenger confusion, the Association of Flight Attendants-CWA wants the FCC and the FAA to maintain the cell-phone ban. While the FCC is considering relaxing those rules, the FAA said that it would continue to ban cell phones on airplanes.
Air France said last month that it will begin testing in-flight voice and data service beginning next year.
Devices used in the ATG band likely would be Voice over Internet Protocol phones using a broadband connection deployed by ATG auction winners. Future VoIP phones could look like cell phones, raising the question of how flight attendants would be able to distinguish approved devices and devices that are not permitted.
The government and prospective auction winners are banking on people wanting to be connected everywhere, including airplanes.
