01.28.2008 08:30 AM
Analog spectrum bidding begins

The auction for rights to the broadcast analog spectrum has begun. At stake is perhaps the last highly valued bundle of 700MHz spectrum to become available in our lifetime.

The auction began January 24, with second round bidding totaling $2.78 billion. The value of bids increased 15 percent from a previous round, the FCC said, without revealing which companies made offers. The largest slice of spectrum, known as the C-block, drew an offer of $1.24 billion.

The government expects the auction, which may last a month or more, to draw winning bids of $10 million to $15 billion. It is expected to include multibillion-dollar bids from the nation’s two biggest wireless phone companies, AT&T and Verizon, as well as Google.

The FCC will hold three bidding rounds per day and will announce the winning bids after the auction ends. It will announce the highest bids after each round, though not the names of the companies that made them. An auction in 2006 took more than 100 rounds to complete, so it could be several weeks before this auction is completed.

If bids for the C-block airwaves reach $4.6 billion, the buyer must open its network to any legal mobile device or program. This provision is thanks to Google, who has already forced the FCC to open the wireless networks to a wider array of service and equipment.

Often described as beachfront spectrum, the airwaves at stake will be released by broadcasters when they switch to digital transmissions on Feb. 17, 2009. The spectrum, becoming available as the mobile Internet era begins, will allow winners to send signals farther from a cell tower with far less power, through dense walls in cities, and over wider territories in rural areas that are now under served.

The latest government report indicates that in 2006, mobile wireless high-speed subscribers grew nationwide by more than 600 percent, and that during the last half of the year, those subscribers made up nearly two-thirds of the total growth in all high-speed lines.

“The spectrum that we are auctioning off is going to be the building blocks for the next generation of broadband services,” said FCC chairman Kevin J. Martin in an interview with “The New York Times.” “It can carry lots of data, penetrates walls easily, travels far and allows for very good broadband wireless service. It will allow a wireless platform to be another competitor in the broadband space.”

The FCC has set a minimum price of $10 billion for five blocks of 1099 licenses. Some analysts believe that record could be exceeded when this 700MHz auction is completed in the next few months.

Each day, the FCC will post the leading bids, but only the amount bid, not the names of the leading bidders.

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