700 MHz Auction: Sure the money’s good, but…

While none of the bidders in the 700 MHz auction are making any noise, one U.S. Senator is. Arkansas Democrat Mark Pryor is lambasting the FCC, and specifically chairman Kevin Martin’s handling of the auction, despite the $19.5 billion in funds so far raised in difficult economic times. According to a story by Broadcasting & Cable, Pryor told a room full of broadcasters that the auction was a disaster, benefiting the major Tier I vendors to the determent of smaller operators.

So let me get this straight: Pryor claims the operators with more money outbid the operators with less money, thus winning more goodies in the end. Correct me if I’m wrong, but isn’t that the way an auction works? Pryor also seems to imply he knows who the big winners are, AT&T and Verizon Wireless. That’s a pretty good guess considering the FCC is keeping bidders’ identities secret until the auction ends, but it’s hardly set in stone. The package bidding system the FCC put in place for the C-block licenses has since collapsed, dividing the nationwide block into 8 regional chunks, all of which could have a different winner. Google may even be one of them. In past auctions, small companies like MetroPCS and Leap have come away with big-city and regional licenses–there’s nothing preventing them from doing the same here.

Not that I think all of the country’s spectral resources should belong to a privileged few large telcos, but very few new entrants to this market have made much of the opportunities given them in the past. Remember NextWave? Its PCS wins didn’t exactly advance competition and fairness in the marketplace. It just held its spectrum hostage for a few years while battling bankruptcy. Aloha Partners didn’t do squat with its 700 MHz licenses except sell them to AT&T. This time around we had Frontline Wireless, which was supposed to be the new nationwide market entrant, but it fizzled out before the auction started.

Pryor can get on the case of the big nationwide providers, but it seems to me they’re the only ones that have the resources and will to build out the nationwide networks that would actually put this spectrum to use. And in the case of the smaller regional providers, there seems to be plenty of more compact licenses for them to pick from. Otherwise this auction wouldn’t be dragging on into round 124. When will it end….

For detailed results of the bidding see the FCC’s Auction 73 page.

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