Spectrum auction kicks off in dismal market

By Michal Lev-Ram

This is not exactly the best week to kick off a multi-billion dollar wireless spectrum auction, what with the markets melting down and tech stocks like Google, Sprint, Motorola and Apple taking big hits.

But on Thursday the Federal Communications Commission’s 700 MHz spectrum auction begins, and analysts worry that the current economic climate could make it harder for newcomers to come up with the cash needed for opening bids.

The 700 MHz spectrum originally was used for analog television and when the FCC mandated that TV go all-digital by next year, it put the rights to the spectrum on the auction block. The spectrum is highly coveted for broadband because signals can travel long distances and penetrate walls. That attracted the attention of Google, which pledged to meet the minimum $4.6 billion bid requirement and successfully pressed the FCC to require the winner of the auction to allow any mobile device to work on the network rather than just those the wireless carrier chooses. Google subsequently unveiled its Android initiative to develop open operating standards and applications for cell phones.

The FCC has set a minimum bid it wants to receive for the various blocks of spectrum. In total, it hopes to raise at least $10 billion. If that is not met, then the agency will begin a new round of auctions by dropping some restrictions — such as the requirement that portions of the spectrum be open to any mobile device – in the hope of attracting additional bidders.

Already, startup Frontline Wireless backed out of the bidding race last week, reportedly due to a lack of financing.

Still, the auction begins with 214 qualified bidders, including AT&T (T), Verizon Wireless (VZ), Google (GOOG), EchoStar Communications (DISH), Qualcomm (QCOM) and even Microsoft co-founder Paul Allen.

As this will be a blind auction, we will know the amount of each bid but not the identity of the bidder until bidding on all spectrum licenses has stopped.

It could be anywhere from a few weeks to several months before the auction ends and the winners are revealed. Who knows, maybe by then the market downturn will be long over.

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Filed under Google, Mobile, Qualcomm, at&t, fcc

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I heartily embrace what the FCC is trying to do. It’s high time the U.S. had coast-to-coast cellular and internet service. With nations like Taiwan who are so far ahead of U.S. cellular markets, this spectrum auction is a way to catch up to all the missed opportunities we’ve had.
Companies like Google should be congratulated for getting the FCC to embrace an open-market initiative-standards should be in place for cellular devices.

Posted By Bill, Sioux Falls Sd : January 31, 2008 2:25 pm

Where do these billions of dollars go????

Posted By Joe Boston : January 25, 2008 9:42 am

$4.6 billion minimum bid, are you kidding me. No wonder we pay such out landish rates for cell phones here. It woud almost be cheaper to bring back the pay phones we used to see on the sidewalks. There would be less accidents on the roads. The other thing that worries me about this article is the fact that Google was able to influence the FCC in such a way that we now may have to deal with them snooping on our phones, like they do on our computers. They are getting worse than Big Brother M in Seattle. Is there no place sacred anymore when it comes to our privacy?

Posted By Terry, Dunn North Carolina : January 25, 2008 5:51 am

I do not agree with the author concern about “despite bad market market condition FCC still goes on with auction”.I think lack of action by FCC is the reason for US staying behind compare to some of the european nation in cell phone penitration and also cell phone user paying highest price compare to some other country.I think lack of action by FCC is also the reason for late transion to DTV, which should have been done 2 years back.

Posted By Ram -New Brunaswick,NJ : January 24, 2008 3:31 pm

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