FCC hauls in $19.6 billion for 700 MHz auction

The FCC's spectrum auction for the 700-MHz band ended this week, with bids totaling $19.6 billion.

The FCC did not immediately announce license winners for the spectrum, but is expected to do so sometime within the next month. The auction garnered bids many big telecom, cable and Internet companies, including Google, AT&T, Alltel, Verizon (listed as Cellco Partnership) and Cox Communications, as well as several smaller local carriers.

The auction, which sold off large chunks of spectrum that are scheduled to be vacated by incumbent UHF television broadcasters in February 2009, lasted for 261 rounds over a span of nearly two months. With $19.6 billion in total bids for 1,090 different licenses, the 700-MHz auction was the most lucrative spectrum auction in the FCC's history, easily besting the 2006 Advanced Wireless Service-1 (AWS-1) Auction that raised $13.9 billion. The most expensive spectrum block was so-called "B Block," which generated $9.14 billion in bids, followed by the open-platform "C Block," which clocked in at $4.75 billion.

While the total spectrum bids nearly doubled congressional estimates of $10.2 billion for the auction, no bidder met the reserve price for the block of spectrum set aside for public safety. That block of spectrum, dubbed the "D Block" by the FCC, was originally reserved for the construction of a high-speed public safety network that would bring America's emergency response system up to date with next-generation technology. With the auction over, the top bid for the D Block was less than half its $1.3 billion reserve price.

Last month, analysts at the Yankee Group predicted that the "horrendous" ownership costs of the block, whereby prospective licensees would be responsible for building out a national public safety network with 75% population coverage within four years of getting the license, would deter companies from making significant bids on the spectrum. 

Frontline Wireless, a start-up carrier that had planned to bid aggressively for the public safety block, announced that it was shutting down its business just weeks before the 700-MHz auction began. With Frontline out of the picture, the D Block received only one significant license bid. FCC chairman Kevin Martin says the FCC is now evaluating its options for the D Block, and that the FCC remains committed to eventually building out a nationwide next-generation public safety network.
Despite the failure to find a licensee for the D Block, Martin touted the auction successful as a whole. In particular, he touted the $4.75 billion in bids for the C Block, a 22-MHz chunk of spectrum that garnered significant attention last year when the FCC placed open-access rules on it mandating that future licensees would be prohibited from blocking or slowing Internet traffic from competing carriers using the network. The FCC also said the C-Block winner would have to allow any devices to connect to the network.

"With the open platform requirements on one-third of the spectrum, consumers will be able to use the wireless device of their choice on those networks and download whatever software or applications they want on it," he says. "The open platform will help foster innovation on the edge of the network, while creating more choices and greater freedom for consumers to use the wireless devices and applications of their choice."