Verizon and AT&T win big in 700MHz auction

After 261 rounds of bidding over more than seven weeks, the federal government auction ended for the 700MHz wireless spectrum last week with Verizon and AT&T the big winners. The auction netted more than $19 billion.

The FCC announced that Verizon Wireless, a partnership of Verizon Communications and the Vodafone Group, bought the largest block of the spectrum. The company agreed to pay $9.6 billion for 108 licenses. AT&T, the second largest bidder, bought 227 licenses for $6.6 billion.

The spectrum won in the auction by Verizon helps it catch up with AT&T, which is the nation’s largest wireless carrier and which also has the largest portfolio of spectrum. “Verizon wanted to come out of this auction narrowing the gap with AT&T, and based on what they know, they have succeeded,” Blair Levin, an analyst with Stifel Nicolaus, told the “New York Times.”

Google bid $4.7 billion for a group of frequencies known as the C block, which can be used for nationwide wireless voice and data service, but it was outbid by Verizon. Google wanted the company that won the C block to open its network to devices and services from rival companies. Google agreed to bid in order to change the rules of the auction. “Google is the happy loser,” Levin said.

The biggest surprise of the auction was that Dish Network, the satellite television company, bid $711 million for 168 wireless licenses. Dish declined to tell the newspaper what it planned to do with the frequencies, citing government rules that restrict bidders from explaining their strategy until they make their down payments on their winning bids. Those payments are due April 3.

Analysts speculated that Dish was likely to offer some sort of video service. It could be a video-on-demand service to satellite TV customers, some suggested. Others guessed that the company might provide a video service for cell phones. It is less likely to enter the mobile telephone business because the frequencies Dish bought are less appropriate for two-way communications than the other frequencies that were sold.

QUALCOMM, which operates the MediaFlo service that delivers television to wireless handsets, bought $558 million worth of spectrum in the auction.

The D block, which remains in limbo because its sole bid did not meet the minimum reserve price set by the FCC, is likely to be reviewed by Congress and the FCC. Hopes for establishing a national public safety network around D block spectrum were diminished when bidding for the spectrum died out at $472 million in the early days of the auction in January.

The rules for the D block were written in response to government reports documenting how incompatible wireless devices had led to confusion during the terrorist attacks of Sept. 11, 2001, and the response to natural disasters, including Hurricane Katrina.

The D block licenses were to be shared by private companies and a group of public safety organizations. It is likely that the rules for those licenses will have to be rewritten and another auction held for them. Rep. Edward J. Markey, D-MA, said he will examine in a public hearing whether “a need for a high reserve price continues to exist.”