Verizon Wireless and AT&T Mobility ran the table at the 700 MHz auction, accounting for most of the record $19.6 billion in bidding that broke historic ground on open access, lost ground on public safety and gave dozens of mostly white-male-owned small businesses a chance to bring a wireless third-pipe into broadband markets dominated by telephone and cable TV giants.
As such, the 700 MHz auction — whose 261 bidding rounds stretched over 38 days — was either largely successful or significantly more of the same, depending on where one sits in the wireless industry, at the Federal Communications Commission or in Congress.
For FCC Chairman Kevin Martin, the 700 MHz auction advanced a number of policy objectives as far as generating revenue, triggering open access on a third of auctioned spectrum, opening opportunities for small-business and unveiling a major entrant, EchoStar Corp. The satellite TV stalwart paid $711 million for 168 E-Block licenses, which due to the unpaired nature of the spectrum will not likely create new competition for the four national mobile-phone carriers but may well amount to a direct affront on Qualcomm Inc.’s mobile TV business.
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Download high-resolution maps of the winners
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No one company dominated the 12-megahertz, A-Block licenses, with Verizon Wireless and U.S. Cellular Corp. picking up 25 each. Verizon Wireless’ haul centered around densely populated urban areas, while U.S. Cellular bolstered its spectrum holdings around its current markets in the Midwest, Northeast and Northwest. Other notable winners include CenturyTel Inc., which sold off its wireless business a few years back but now appears to be making plans for a new push into wireless; and Cellular South, which reinforced its service areas in the Southeast. |
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AT&T Mobility made a statement in the 12-megahertz B Block, snapping up one-third of the available licenses and spending $6.6 billion. Runner-up U.S. Cellular scooped up 127 licenses in the B Block that — similar to its A-Block approach — are near its current market clusters in the Midwest, Northeast and Northwest. Not to be left out, Verizon Wireless scored 77 B-Block licenses, which, unlike the C-Block licenses it acquired, will not be beholden to the government’s open-access provisions. |
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Verizon Wireless scored what could be the crown jewel of the 700 MHz spectrum auction by walking away with seven of the regional, 22-megahertz C-Block licenses, spectrum bound to the FCC’s open-access provision. The provision requires C-Block winners to provide access to any device compatible with the network’s technology. The industry’s No. 2 carrier paid more than $4.6 billion for licenses covering the contiguous 48 states as well as Hawaii. Triad 700 L.L.C. picked up C-Block licenses covering Alaska, Puerto Rico and the U.S. Virgin Islands, while Small Ventures USA L.P. was the top bidder for the C Block covering the Gulf of Mexico. |
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Perhaps the auction’s biggest surprise came in the E Block, where satellite television provider EchoStar Corp. — which bid under the Frontier Wireless L.L.C. moniker — picked up 168 of the total 176 E-Block licenses for more than $711 million. The E Block’s six megahertz of unpaired spectrum is thought to be ideal for a streaming television service. Qualcomm Inc., which was expected to bid on the E Block in an attempt to bolster the capacity of its MediaFLO USA Inc. mobile TV subsidiary, picked up only five E-Block licenses covering markets in California, Arizona and the Northeast. |
| Maps courtesy of www.kbeauctions.com. |
“This auction will end up having a transformative effect on the wireless industry in terms of a more open wireless platform,” Martin predicted.
Googled
Google Inc. had a little something to do with that, bidding the $4.6 billion minimum to trigger the open-access condition on the C Block only to have Verizon Wireless follow up with winning bids on regional licenses covering the continental United States and Hawaii. It went exactly to script, just as telecom analysts had predicted. The C-Block outcome surprised few in a blind auction credited for keeping anti-competitive activity down and jolting auction proceeds skyward.
Analysts at Stifel, Nicolaus & Co. Inc. dubbed Google “the happy loser.”
Indeed, the Internet search goliath had a hard time suppressing its glee.
“While the Commission’s anti-collusion rules prevent us from saying much at this point, one thing is clear: Although Google didn’t pick up any spectrum licenses, the auction produced a major victory for American consumers,” said Richard Whitt, Washington telecom and media counsel, and Joseph Faber, corporate counsel, on a Google blog post. “We congratulate the winners and look forward to a more open wireless world. As a result of the auction, consumers whose devices use the C Block of spectrum soon will be able to use any wireless device they wish, and download to their devices any applications and content they wish. Consumers soon should begin enjoying new, Internet-like freedom to get the most out of their mobile phones and other wireless devices.”
The FCC’s anti-collusion gag rule lifts April 3 (6:00 p.m. ET), the same day down payments are due on the 1,090 licenses bidders picked up in the 700 MHz auction. The remainder of payments must be submitted by April 17. The end of the quiet period could trigger merger and acquisition talks among wireless and other communications companies.
Was it a success?
Undoubtedly Google as well as other application and device vendors — large and small — see the beginnings of a potentially huge business opportunity, one stemming from the migration of the Internet from desktop computers to handheld wireless gadgets.
Still, the degree to which wireless open access is a success in the C Block and possibly other frequency bands will depend largely on the FCC’s ability to monitor compliance and enforce its rules.
Commissioner Jonathan Adelstein, one of two Democrats on the GOP-led FCC, said the auction failed to advance wireless diversity goals espoused by Congress more than a decade ago.
“It’s appalling that women and minorities were virtually shut out of this monumental auction,” said Adelstein. “It’s an outrage that we’ve failed to counter the legacy of discrimination that has kept women and minorities from owning their fair share of the spectrum. Here we had an enormous opportunity to open the airwaves to a new generation that reflects the diversity of America, and instead we just made a bad situation even worse. This gives whole new meaning to ‘white spaces’ in the spectrum.”
The FCC remains entangled in litigation over small business bidding rules crafted before the 2006 advanced wireless services auction.
