700-MHz Spectrum Auction Comes to a Close

FCC Announces More than $19B in Proceeds

By Glen Dickson -- Broadcasting & Cable, 3/19/2008 10:15:00 AM

The Federal Communications Commission closed its auction of broadcast spectrum that is being reclaimed from TV stations as part of the digital-TV transition and announced that it netted the federal government a record $19.592 billion in proceeds.

The auction of 700-megahertz spectrum, officially known as Auction 73, began Jan. 24 and went through 261 rounds of bidding. While the FCC hasn’t yet published its official list of auction winners, companies such as AT&T, Verizon Communications and Google participated.

The 700-MHz spectrum, which currently supports UHF broadcast signals, is viewed as highly desirable for launching new wireless services because of its excellent signal-propagation characteristics and the ability to achieve a wide range of coverage from relatively few transmission towers. That explains why the revenue from Auction 73 far exceeded other FCC auctions. In comparison, the 2006 Advanced Wireless Service-1 (AWS-1) Auction raised $13.9 billion.

The $19.592 billion generated by the auction -- which will be used to support public-safety and DTV initiatives -- almost doubled initial estimates by Congress of some $10.2 billion. The FCC noted that all other 68 auctions it conducted in the past 15 years collectively generated a total of $19.1 billion.

In a statement, FCC chairman Kevin Martin hailed the 700-MHz auction as a significant success for the country’s broadband-policy initiatives.

“This auction provided an opportunity to have a significant effect on the next phase of wireless-broadband innovation,” Martin said. “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. The open platform will help to 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.”

In speaking about the open-platform requirements, Martin was referring to the so-called C-block of spectrum. Google successfully lobbied the FCC to make sure that whomever wins the C-block portion of the spectrum (at a reserve price of $4.6 billion) will allow open software applications to be downloaded to mobile devices and that consumers will be able to use mobile devices of their choice to access the spectrum -- part of the search giant’s effort to extend its technology to devices beyond the PC.

The only hiccup for the FCC in Auction 73 was the D-block, a portion of the spectrum that was intended to be used primarily for public-safety applications and shared by private companies and public-safety organizations. While several players including Frontline Wireless, a concern headed by former FCC chairman Reed Hundt, expressed initial interest in bidding on the D-block, no company stepped up to meet the minimum reserve price of $1.3 billion for the spectrum.

Martin said the FCC “remains committed to ensuring that we work to solve public safety’s interoperability challenges,” and it is evaluating other options for the spectrum.