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FCC Auction Nears End, but Questions Abound

The Federal Communication Commission's auction of valuable 700 mhz radio spectrum is entering the final stretch. As bids trickle in for the five blocks of spectrum, a couple things are certain: The auction has raised $20 billion, double what the FCC expected to raise from the auction. And the block reserved for an interoperable public safety network likely won't meet its minimum bid requirement.

That last point, perhaps, is the more important issue for industry watchers, in that much of what happens next depends on what the FCC will do with the so-called D-block.

Specifically, the FCC won't reveal winners of any of the other blocks until it decides what it will do with the D-block. One scenario would be reauctioning the D-block with a lower minimum price and more flexible conditions. The C-block, spectrum set up for commercial use, was designed with conditions that it must be built out as an open network. Most industry watchers and sources on the Hill say there will be a lot of pressure from Congress to get the FCC to reveal the winners of the non-D blocks and get the proceeds from those auctions deposited into the Treasury.

It also won't be clear when qualified bidders of any of the blocks will be able to talk about the auction, bound by anti-collusion rules that have become confused by the unexpected failure of the D-block.

"Although both Congress and the FCC will want to re-auction the D-block quickly, there are a number of tough issues that will need to be addressed, which will take time," Stifel Nicolaus analysts Blair Levin and Rebecca Arbogast wrote in a research report today.

They predict the auction will end next week and the FCC will announce how it will deal with the public safety block the following week. By early April, the analysts expect the anti-collusion rules will be lifted.

At that time, we will know winners of the auction. The analysts said Verizon and AT&T are likely to be the biggest winners of the auction, with Google being a "willing loser."

By Cecilia Kang  |  March 7, 2008; 2:46 PM ET  | Category:  Cecilia Kang
Previous: VC Kleiner Perkins Gives iPhone $100 Mln Boost | Next: The 411 on Text Msg Spam

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Two corrections -

The anti-collusion rules are not the rules that require the identities of the bidders to remain anonymous. The anti-collusion rules prohibit "collusion" between bidders.

It's anonymous bidding that is keeping the IDs of the bidders under wraps.

Also, I don't know why the author states that the FCC only expected to raise $10 billion from this auction. $10 billion is approximately the total of the combined reserve amount of all 5 spectrum blocks.

But the reserve amount is not the same as the amount that the FCC expected to bring in. It is the minimum amount that the FCC would accept.

I think most parties expected $15-$20 billion. The press reports of $10 billion were mostly from uninformed sources that equated a reserve price with an expected bid total

Posted by: John | March 8, 2008 11:43 AM

Why doesn't someone ask if the FCC's
license auctions are Constitutional or not?
Why should communications belong only to
the richest of the Corporations?

Posted by: Nick Leggett | March 8, 2008 12:16 PM

Verizon is willing to spend *any* amount to make sure they don't have any competition.

What the FCC is basically doing is screwing us all for $15B dollars, or about the same amount as we spend for 3 weeks in Iraq.

Just so you know how much the FCC values real competition.

Posted by: Ombudsman | March 8, 2008 8:45 PM

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