Technology

Spectrum Auction Update: Little Activity Through Round 45

C Block Draws Higher Bid as Eight Separate Regions than as Total Package 2/07/2008 01:43:00 AM Eastern

The Federal Communications Commission's 700-megahertz spectrum auction continued Thursday with five more half-hour rounds but little bidding activity. Starting Friday, there will be six rounds of 25 minutes each.

As the bidding cools off, the rounds proliferate and shorten to try to goose the process.

auction gavel

The auction, which began Jan. 24, finished its 45th round, with the bid total standing at a record $19.04 billion. The spectrum is being reclaimed from TV broadcasters in the switch to digital, which means winning bidders can claim it starting Feb. 17, 2009. It is beachfront property for advanced wireless services.

One wrinkle in the bidding is that the so-called C block of eight regions worth of licenses that could be used for a national network have now drawn a higher collective bid as eight separate regions than they did as a package. A single, anonymous, bidder bid the package above the $4.6 billion floor price, but since then, individual bids on the regions topped that.

This means that if the auction ended tomorrow, unless the high bidder for all eight of the packaged regions was the same one, which is unlikely, it would not result in a new national wireless network.

The auction ends when there are no new bids in a round. The most recent round had 174 bids, upping the total by $16.89 million.

The FCC is auctioning five blocks of spectrum, with all having to meet their floor prices or be reauctioned. Four of the five have already done so, with only the D block stuck at $472 million, about one-third of its floor price. That is the block that can also be used as a national network, but one that must be shared with first-responders.

The FCC has to return at least $10 billion to the treasury, so it set floor prices that added up to that $10 billion amount. But the commission can't change the auction rules in midstream, so even though collectively, the bids are almost double that $10 million figure, it must still reauction the D block.

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