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$2.4B offered at initial round of U.S. 700MHz auction

Posted: 28 Jan 2008     Print Version  Bookmark and Share

Keywords:license auction  U.S. 700MHz wireless spectrum  public safety D Block 

Around Rs.9,474.81 crore ($2.4 billion) was offered during the initial round of bids in the auction of the United States' 700MHz wireless spectrum opened by the U.S. Federal Communications Commission beginning January 24. A collective sigh of relief went out as a bidder stepped up and offered Rs.1,863.38 crore ($472 million) for a single nationwide license in the so-called public safety D Block.

Bidders' anonymity
The identity of the bidder, however, is being kept private for now in accordance with new FCC auction rules. The second round in the auction was scheduled to get under way Thursday afternoon. The D Block bid could be trumped by another bidder, but Rs.2,142.89 crore ($542.8 million) will have to be offered to beat the earlier bid.

Other bids were submitted for licenses in various parts of the country ranging from thousands of dollars to more than Rs.3,947.84 crore ($1 billion) for a package of licenses in all 50 states. A single bid of Rs,4.10 crore ($1,037,548) was submitted for the package of licenses in the C Block. A bid to trump that offering would have to be for Rs.4.92 crore ($1,244,993).

The major bids likely came from companies with very deep pockets. The big three outfits that signaled their intention to bid in advance of the auction were AT&T, Google, and Verizon.

"The bid on the D Block was important because there was some concern that no one would bid for it," said Joe Nordgaard, managing director of wireless consultancy Spectral Advantage LLC. "The Rs.1,863.38 crore ($472 million) could stand up for a long time" as the bidding progresses over the next days.

Interest in the D Block had grown over several months as Frontline Wireless, a high-profile startup, had put together a team of venture capitalists and savvy wireless experts, including former FCC Chairman Reed Hundt. They saw the D Block as a way to develop a badly-needed nationwide public safety network as well as a way to use it for commercial interests.

But Frontline dropped out of the bidding, apparently because it couldn't raise the huge sums of money that likely would be required to nail down a winning bid.

Nordgaard, who has participated in earlier FCC spectrum auctions, noted that the 700MHz auction is a pioneering event in that the names of the bidders are initially kept private, so bidders won't know who they are bidding against. "We won't know the winners until later," he said.

Importance of the auction
There has been added interest in the auction this year because Google, a cash-rich search engine and online advertising company, has expressed interest in bidding for some of the spectrum, which would pit it against traditional telecommunications firms.

The spectrum being auctioned off is appealing because signals in those bands can travel long distances and penetrate thick walls. This may be the last significant amount of spectrum that is made available for quite some time, so wireless companies view the auction as the last chance to improve the coverage and capabilities of their networks.

- W. David Gardner

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