The long-anticipated 700 MHz auction kicked off today, attracting 1,849 bids totaling more than $2.4 billion during the first round.
The Federal Communications Commission, which will hold a second round of bidding today, is keeping the identities of bidders secret during the auction to guard against anti-competitive behavior. Names of all bidding winners will be disclosed after the auction closes, perhaps a month or so from now.
Click here for complete 700 MHz auction coverage.
The national commercial-public safety D-Block license received a $472 million bid. The minimum bid for the second round is nearly $543 million, far below the $1.3 billion reserve price set by the FCC for the D Block. Ever since the folding of startup Frontline Wireless L.L.C., which had rounded up blue-chip Silicon Valley investors to pursue the D Block, the public-safety community and policymakers from the FCC and Congress have voiced concerns about the prospects for the unprecedented, public-private national license. Unstable financial markets, dragged down by the mortgage-credit crisis, have fueled fear that the D Block will go unclaimed.
Over $1 billion for C Block
A collection of eight regional licenses in the C Block covering the 50 states garnered the highest bids during the first round, totaling just over $1 billion. There is particular worry whether the open-access C Block, a collection of regional licenses that had modest bidding activity in round one and comprising about a third of the total spectrum for sale, will draw the minimum $4.6 billion reserve price to keep the open-access license intact. Some experts predict Google Inc. may bid up the price up to that level for precisely that purpose, but may well walk away from the auction without any wireless licenses.
Other high bids during the first round included an $83 million bid for a 12 megahertz A Block economic area license covering the New York City area; a $59 million bid for a 12 megahertz B Block cellular market license covering New York City; and a $41 million bid for a 6 megahertz, unpaired E Block EA license also covering the New York City area. Qualcomm Inc. was expected to be a bidder on the E Block license as a way to bolster the spectrum position of its MediaFLO USA Inc. subsidiary.
First round results
| Top 5 provisional winning bids | Package/License |
Amount |
Minimum bid for round 2 |
| 1 |
Package 50 States |
$1,037,548,000 |
$1,244,993,000 |
| 2 |
WP-NWA511-D |
$472,042,000 |
$542,848,000 |
| 3 |
WY-BEA010-A |
$83,212,000 |
$99,854,000 |
| 4 |
WY-CMA001-B |
$59,435,000 |
$71,322,000 |
| 4 |
WY-BEA010-E |
$41,606,000 |
$49,927,000 |
| 5 | WY-BEA064-A Chicago-Gary-Kenosha IL-IN-WI |
$39,012,000
|
$44,864,000 |
Business as usual
All told, there is a growing view that the two largest national mobile carriers — AT&T Mobility and Verizon Wireless — will dominate 700 MHz bidding. In other words, business as usual, without the emergence of new national entrant in the wireless industry. Sprint Nextel Corp. and T-Mobile USA Inc., the third and fourth largest cellular carriers, are not participating in the auction.
“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,” said Michael Calabrese, director of the Wireless Future Program and VP at the New America Foundation. “The FCC imposed multi-billion reserve [minimum] prices on the spectrum, which will shut out all but the biggest companies, resulting in no new competition.”
Calabrese added: “The auction’s major wild card is Google. Even if Google is outbid in the end, they could transform the wireless marketplace by bidding at least $4.6 billion, the reserve price that triggers open access and consumer choice conditions that the FCC has imposed on the winner of the largest, nationwide block of spectrum [the C Block]. Google’s bidding behavior will determine if this auction opens wireless networks so that consumers have a choice of devices, software and content in the future.”
One public-interest group is not relying on the 700 MHz auction or industry voluntary efforts to get open access into the wireless space.
“The wireless industry is dominated by a handful of companies with a track record of stifling competition and an aversion to the innovation that open networks bring to the market,” said Ben Scott, policy director of Free Press. “Placing the promise of the mobile Internet exclusively under the gatekeeper control of these companies is a chilling prospect. We need policies that open the closed networks of today and guarantee an open wireless Internet for future generations.”
Open access
The FCC has yet to rule on Skype Ltd.’s nearly year-old petition to make open access — the unfettered attachment of third-party devices and applications to networks — the across-the-board law of land in the wireless industry.
“These [700 MHz open-access] conditions are a step forward — but they only apply to a small slice of the public airwaves on a network that won’t be available for years,” said Timothy Karr, campaign director of Free Press. “To put the mobile Internet in the pocket of every American, the FCC should open devices and applications on all wireless networks right now.”
