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FCC spectrum auction drawing to a close

Auction raises $19.6B, far exceeding goal

March 17, 2008 12:00 PM ET

Computerworld - After nearly eight weeks and more than 240 rounds of bidding, the U.S. Federal Communications Commission's auction of 700-MHz wireless spectrum is drawing to a close and could wrap up this week.

As of noon today, the auction had raised nearly $19.6 billion for the federal treasury, far exceeding the hopes of many in Congress and the FCC that the auction could raise at least $10 billion.

The auction will officially end when no more bids are placed in any rounds, the FCC has said. In Round 240, held shortly after noon today, only five new bids were placed on 1,099 licenses, raising the total of the provisional bids by $83,000, according to the FCC's public site.

In contrast, in early rounds after the start of bidding on Jan. 24, hundreds of bids were made in each round.

The FCC today raised the number of bidding rounds to 14 per day, each lasting only 10 minutes, which is a typical sign that an auction is nearing its end, FCC officials said.

Blair Levin, an analyst at Stifel, Nicolaus & Co. in Washington, said that based on action in bids, the auction could end in a matter of days, even this week.

In terms of the total dollars collected, FCC officials consider the auction a success.

However, the biggest disappointment came in the public safety D block to create a band of spectrum to be used by the private sector and turned over to first responders and others during large emergencies. No bidder has come forward to make the minimum $519 million bid, and just one, for $472 million, was made in the first round.

Levin called the lack of D-block bidding the auction's "most significant difficulty" but praised the underlying concept of having a two-part use of spectrum for private and public interests. "It's a legitimate idea ... but difficult to implement, and no one was willing to come forward," he said.

Bidding on C-block licenses attracted the most attention when a $4.7 billion bid was placed Jan. 31 on a national C-block license, exceeding the minimum bid amount.

That move was significant because it meant that FCC rules about open networks and open access would apply to the new spectrum for the spectrum owner. In subsequent rounds, bidders made individual bids on the 12 bands within the C block to exceed the total combined bid.

Levin speculated that the winner of most or all of the 12 bands in the C block was Verizon Wireless, based on the bidding patterns and statements made by bidders before the auction started. The bidders are prohibited from speaking publicly about the auction while it is under way.

Google Inc., which had been a big proponent of open access, said it expected to bid in the auction, and it was probably the first to push the C block over the minimum bid, if only to make sure open-access rules would apply to the C block, Levin said.

With the C block, there are still many questions about openness. If one company does not control all 12 blocks, it could mean different rules for openness would apply to customers, Levin and others have said. "There are still a lot of question marks," he said.

Winners and the FCC are expected to comment once the auction is finished.

Read more about Mobile/Wireless in Computerworld's Mobile/Wireless Topic Center.

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