Thursday, March 20, 2008

Google Gets Skunked in Wireless Bids

Verizon Wins Key FCC Auctions

March 20, 2008 4:04 p.m.

Verizon Wireless was the biggest winner of communications spectrum in the Federal Communications Commission's recently concluded auction, the agency's chairman said Thursday.

The company, which is jointly owned by Verizon Communications Inc. and Vodafone Group Plc, won six large licenses that effectively will give it a national license to provide next-generation wireless broadband service in the so-called C-Block of the spectrum being sold.

In addition, it was the largest winner of licenses in the A-block, which are medium-sized licenses, and won 77 more in the B-Block, the smallest licenses that were being auctioned off. According to analysts at Stifel Nicolaus, Verizon Wireless spent $9.63 billion in the auction.

Google Inc., a potential newcomer, didn't win any licenses, FCC Chairman Kevin Martin said at a press conference at the agency's headquarters.

Another newcomer, Echostar Communications Inc., the satellite television provider, won significant numbers of licenses, enough to provide the company with a nearly nationwide license.
Echostar, through a vehicle it created called Frontier Wireless, won several licenses in the A- and E-Blocks. There had been the suggestion by some analysts that this spectrum was ideally suited to providing wireless broadband service.

An FCC official, speaking on the condition of anonymity, said that this wasn't necessarily true. He said that, as technology improved, this spectrum could be used to provide wireless broadband, but stressed he didn't know what Echostar's plans for the airwaves were.

Echostar spent $711 million in the auction, Stifel Nicolaus said.

AT&T Inc. won 227 of the smallest licenses being sold, but didn't pick up any in the larger blocks being auctioned off. Stifel Nicolaus said AT&T spent $6.64 billion.

AT&T hadn't been expected to be an aggressive bidder for some of the larger chunks of spectrum being sold, having completed a large acquisition for airwaves from a private seller shortly before the auction began.

Chip maker Qualcomm Inc. was the third largest spender in the auction, said Stifel Nicolaus, spending $1 billion on new licenses.

The auction closed earlier this week, with $19.6 billion being raised by bidders for the airwaves. This was the highest amount by some margin ever raised in the 15-year history of FCC spectrum auctions.

Mr. Martin confirmed that he had asked the commission's inspector general to investigate what happened over the D-Block, the one section of spectrum which didn't meet its minimum price.
He said the move followed requests made by several public interest groups, which had alleged improprieties on the part of a party representing public safety in negotiations with potential bidders.

There was only one bid for the D-Block, and that came in the first round for the smallest amount available. Mr. Martin said Thursday that bidder was Qualcomm.

If there were to have been a winner of the D-Block, it would have been obliged to work with public safety to build a national wireless broadband network for primary use by the country's first responders. Any spare capacity on that network could then be sold off to the commercial wireless industry.

Mr. Martin said Thursday that he still hoped to make the public-private partnership model envisaged by the D-Block rules work as it was the best available solution to the public safety community's inability to communicate effectively.

Congress has announced plans to hold a hearing into what went wrong with the D-block's auction, too. Mr. Martin said his hope was that the issue would be resolved before the end of the year.

The spectrum auction was widely seen as being the last best chance for a new player to make a foray into the provision of wireless broadband services. The airwaves are coming available to the commercial wireless industry due to a move by television broadcasters to a digital signal, which requires far less spectrum.

Winners must pay for the airwaves by the end of June and they will take possession of it in February 2009, after the broadcast industry makes its transition to digital television.