FCC chairman says it’s a bad time for spectrum auction

FCC chairman Kevin Martin said he’s concerned about the timing of the upcoming spectrum auction on January 24th.

“Is it an ideal time to be conducting an auction, I’m not so sure,” he questioned at a news conference last week, “but we’re required by law to conduct it at this time so we will do so.”

Already, uncertainty in the financial markets have led to the closing of Frontline Wireless, which announced recently that it would bow out of the auction. Unable to assemble the necessary funds to meet auction prequalifications, Frontline said it was closed for business.

Due to the cost of buying the spectrum and then actually building a wireless network using it, other potential bidders are likely to be limited to AT&T, Google, Verizon Wireless and Vodofone. The rules also state that unless a minimum price of $1.3 billion is bid for that section of airwaves, the commission would forfeit the sale.

Martin declined to say whether the FCC would then abandon the obligation to work with public safety and simply sell the spectrum without any conditions attached. “It’s premature to begin speculating what the commission would end up doing,” he said.

Analysts have suggested that since Congress has already spent $10 billion it expects the auction to raise, there would be pressure on the FCC to sell the spectrum without any conditions attached to maximize revenue from the sale.

Last week, the FCC released a list of 214 bidders that qualify for the 700MHz spectrum auction to begin on Jan. 24. Among them was Google, which is investing considerable resources to enter the mobile Internet space.