AT&T wins FCC approval for Aloha wireless spectrum

Two commissioners concerned with competition if AT&T does well in ongoing auction

The Federal Communications Commission yesterday approved AT&T Inc.'s purchase of wireless spectrum from Aloha Spectrum Holdings for an area covering 60% of the U.S. and serving 196 million people.

The spectrum covered by the FCC ruling, which passed by a 4-1 vote, is in the 700 MHz band, but it is not part of the FCC's continuing 700 MHz spectrum auctions.

The two Democratic FCC commissioners were concerned that, in addition to purchasing the Aloha's spectrum, AT&T could win a substantial amount of spectrum in the auction and that its combined holdings could lead to reduced competition.

In a brief statement, one of the two Democrats, Jonathan Adelstein, said he hoped AT&T would attempt to provide wireless data and content services at lower costs. He said he voted in favor of the Aloha sale because there was no public opposition to it but remained "troubled" that AT&T could hold a "disproportionate share of the spectrum" when the auction is finished. The other Democratic commissioner, Michael Copps, voted against the ruling.

In the FCC's ongoing auction, the provisional winning bids added up to a total of nearly $18.9 billion after 32 rounds.

Late yesterday and early today, C block bidding heated up again in the auction. Starting late yesterday, several individual regional bids surpassed last Thursday's package bid of $4.7 billion for eight regional licenses for the entire 50 states.

Analysts at Stifel Nicolaus in Washington said the recent activity in the C block could result in several players owning the eight licenses, "which could create complications for the FCC's openness policy," they wrote.

The fact that the $4.7 billion bid was made last week by one player means that the C block is subject to open access for devices and applications. However, if different entities own the C block footprint, "they could choose different technology paths, making it more difficult for third parties to take advantage of the openness rules," they noted.

Multiple winners in the C block "would probably be marginally bad news for Google Inc.," the analysts noted, since Google had hoped to take advantage of a nationwide winner's commitment to openness.

Possible bidders for the C block include Verizon Wireless and AT&T, as well as Alltel and others. Stifel Nicolaus said Verizon is likely to bid to win a sizable amount of spectrum just because AT&T has the most spectrum holdings in the top 100 markets, with 75 (including the Aloha holdings), compared to 49 for Verizon, 48 for T-Mobile and 32 for Sprint Nextel Corp. Sprint officials said they were not bidding in the current auction.

In the public safety D block of spectrum, only one bid of $472 million in the first round had been made through 32 rounds of bidding that concluded at noon today. That was well below the minimum required. Bidding for 1,099 licenses will continue, perhaps for many more days, until no other bids are placed.

Copyright © 2008 IDG Communications, Inc.

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