700 MHz Auction: And they’re off!

The 700 MHz auctionkicked off today with two roundsof bidding, racking up atotal $2.425billion. Unlike previous auctions, the FCC is keeping secret the leading bidders’ names, revealing them only after the auction concludes. But the bids themselves are public and the biggest bid so far is for the C block, a package of 8 regional licenses covering all 50 states. Theopen-accessspectrum blockattractedtwo bids in two rounds, ending at $2.25 billion for the day.(See the full bidding results on the FCC’s Auction 73 page)

The second and smaller nationwidelicense, block D, garnered only a single bid,$472 million, in the firstround.The D block is shared commercial-public safety band that has generated so much controversy of late. After Frontline Wireless folded earlier this month, the D block has failed to attract another champion, which could mean it will go unclaimed by auction’s end. The bid is far below the $1.3 billion reserve price the FCC has set on the band, and if the lack of interest continues into the later rounds of the auction, the FCC will have to decide whether re-auction the spectrum.

“It was taken for granted that Frontline was going to be the company running that shared public safety network,” said Bill Ho, wireless services analyst for Current Analysis. “No one seems to be stepping into their place.” The requirements for entry in D block are much higher than for the other licenses, Ho said. Even the mega-sized C block can be split into 7 regional licenses, but the winner of the D block had to prove to FCC that they could maintain a nationwide network that not only integrate with thousands of emergency agencies across the country, but prioritize their communications, he said. “Anyone who bids on that spectrum really has to know what they’re getting into,” Ho said. “This would be a huge blow to public safety if no one bids on it.”

Whoever the initial mystery bidder is, it might face challengers, if not in the upcoming rounds then when the auction appears to be coming to close. Spectrum is such a valuable resource,operators may not be able to resist picking up 22 MHz nationwide license for a measly $1.3billion (Verizon Wireless has paid as much in $1 billion for 10 MHz of spectrum in New York City alone).But they’ll have to weigh those against the stipulations on the spectrum. Not only will they have to deploy the dual-use public-private network, the FCC’s usual leniency towards rolling out networks in a timely manner probably won’t apply. The carrier that wins it will be expected to build a nationwide network and build it fast.

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