Bidding stalls again on key U.S. wireless airwaves
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Bidding stalled on Tuesday in the  closely watched auction of a piece of wireless airwaves that  the U.S. government is selling, according to data released by  the Federal Communications Commission.
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An effort to create a nationwide wireless network for firefighters, police and other emergency responders has hit a stumbling block as the Federal Communications Commission's auction for airwaves dedicated for public-safety use has attracted paltry interest from bidders.
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(InfoWorld) - Several companies have challengedÂ spectrum auction rulesÂ recently set by the U.S. Federal Communications Commission, with Frontline Wireless protesting that the auction of the 700MHz band to be auctioned in January could shut out small bidders. In addition, AT&T has asked the FCC to reconsider requirements for the winning bidder of a block of spectrum to be used to build a nationwide broadband network for public safety agencies. The rules require bidders to reach a service agreement with public safety officials before the auction, and the FCC's decision to deny bidders the spectrum if an agreement is not reached is "an extreme penalty," AT&T said in its petition. AT&T and Frontline, a startup made up of government and wireless industry veterans, filed petitions for reconsideration of the auction rules with the FCC Monday. They were among 10 companies that filed petitions in the last week asking the FCC to reconsider the auction rules it set in July for the 700MHz band of spectrum being vacated by U.S. television stations. The FCC is scheduled to auction 62MHz of spectrum in the 700MHz band beginning Jan. 16. The FCC set a reserve price of $10 billion for the entire 62MHz, but many observers believe the auctions will raise much more than that. The spectrum is currently controlled by U.S. television stations using channels 52 to 69. The U.S. Congress in late 2005 passed legislation that requires the stations to move to digital broadcasts and abandon this spectrum by February 2009. Frontline raised several objections about the auction rules. The company and someÂ consumer groupsÂ had called for the FCC to require that the winning bidder of a portion of the spectrum resell the spectrum at wholesale rates, but the FCC declined to do so. FCC members talked about including small businesses in the auction, Frontline noted. But the FCC denied bidding discounts, called credits, for small business wholesalers, Frontline said. Small businesses can't compete against large wireless carriers unless they adopt a wholesale model, the company said. "Wholesaling is also the only model a new nationwide wireless network operator could realistically afford to adopt, given the massive costs associated with providing retail service -- consider Verizon's 2,300 retail outlets and its $1.9 billion annual advertising budget," Frontline said in its petition. Frontline also suggested the reserve, or minimum prices, for two blocks of spectrum are too high. Frontline objected to a reserve price of about $1.3 billion for a 10MHz portion of spectrum to be paired with 12MHz set aside for emergency response communications. Frontline said the $4.6 billion reserve is also too high for another 22MHz of spectrum, for which the FCC adopted so-called open access rules. If the reserve price is met, the FCC will require the winning bidder to allow customers to bring wireless devices from other carriers and prohibit the winner from blocking or slowing competing Web content. Under the FCC rules, both blocks of spectrum would be re-auctioned under new rules if the reserve prices aren't met. "The unlawfully high reserve prices will nullify or disrupt and damage the Commission's carefully considered decisions as to the highest and best use of this spectrum, encourage bidding strategies that defeat these sound allocations decisions and seriously reduce auction revenues," Frontline's lawyers wrote. Earlier this month, Verizon Wireless asked the U.S. Court of Appeals for the District of Columbia Circuit to review the FCC's decision to require open-access rules supported by Frontline and some consumer groups. Those rules are "arbitrary, capricious, unsupported by substantial evidence and otherwise contrary to law," Verizon Wireless said in a brief filed with the court.
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Within weeks, the U.S. Federal Communications Commission is expected to set conditions for the auction of the most valuable wireless spectrum still available in the U.S.
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A handful of people who bid in the disastrous C-Block PCS auction in 1996 plan to participate in the upcoming 700MHz contest despite warning signs indicating the potential for similar troubles.Like the earlier auction, the 700MHz auction is set to occur in a faltering economy, presenting challenges to license hopefuls needing cash. Yet, just like that ill-fated auction more than 10 years ago, an oddball collection of participants plan to bid, this time including the Missouri Farmers&#39; Union, the Roman Catholic Diocese of Brooklyn, and Disney.The C-Block PCS auction was infamous because it was designed not just for companies with access to billions of dollars but for entrepreneurs interested in getting into the wireless industry. Postal carriers, lawyers, and doctors quit their day jobs and invested their savings, confident that U.S. Federal Communications Commission (FCC) incentives would help them make it big.But the auction turned into a debacle. Of the original 255 bidders, 89 emerged with licenses, and only a handful of them actually started businesses. The rest went bankrupt, sold their licenses for pennies on the dollar, or returned them to the FCC in an amnesty program.Take Vince McBride, an approved bidder for the upcoming 700MHz auction who lives in San Diego and has won and lost in several auctions. &quot;There are ups and downs, but I keep trying,&quot; he said.McBride was a postal carrier who sunk his life savings into the PCS auction in 1996. A series of lawsuits delayed the auction and then the award of licenses. During that time, Wall Street soured on the wireless market and license winners, who bid prices sky high based on attractive payment terms set by the FCC, struggled to finance their wins. McBride got lucky and returned his licenses to the FCC for little loss.Then the FCC reauctioned licenses and McBride won a new one, which he managed to sell for a nice profit. But in a subsequent reauction, he won another license that was later repossessed by the FCC, which was forced to give it back to the original winner after a series of lawsuits.McBride&#39;s sometime partner Scott Reiter, an emergency room physician who splits his time between Santa Monica and the Philippines, has had a similar series of wins and losses in FCC auctions. He too plans to bid in the upcoming auction. Reiter won a few licenses back in 1996 and shortly after got a few good offers from operators interested in buying them.&quot;I got greedy, basically,&quot; he said. He held out for better offers, which didn&#39;t come, and eventually had to sell his licenses at a loss.Reiter was undeterred, though. He entered the 2002 auctions for 700MHz licenses --&#160;back before there was a solid deadline for when TV broadcasters had to vacate the spectrum. He bought licenses in three markets, later selling the spectrum for a nice profit to AT&amp;T.&quot;When I bought that spectrum, it went up in value like crazy,&quot; Reiter said. McBride also won 700MHz licenses then, later selling them to AT&amp;T. They both agreed with AT&amp;T not to disclose the purchase price.Bidders are currently in a quiet period during which the FCC forbids them to discuss their plans for the upcoming auction. But some of them say that because this time around there is a fixed date for when the spectrum will be available to buyers -- 2009, after the TV broadcasters must vacate it -- the value is easier to gauge than in the previous 700MHz auction. However, it may be difficult for some bidders to get credit these days, which could help keep prices down, they say.While many of the individual bidders insist they intend to build networks if they win the spectrum, many likely have other plans. &quot;I think many of them want to buy and resell it,&quot; said Nadine Manjaro, a senior analyst with ABI Research. A look at the result of the earlier 700MHz auctions, which distributed what&#39;s thought to be less valuable portions of the band, could be spurring big dreams for bidders.Aloha Partners, one of the biggest winners in those auctions, sold its licenses to AT&amp;T for $2.5 billion late last year. Aloha spent over $40 million at the auctions but also later bought licenses from other companies for undisclosed amounts. It is thought to have made a handsome profit.While much attention has been focused on the billions that big companies like Google had to put up to enter the 700MHz auction, some of the licenses could go for quite cheap, which could be attracting some of the individuals hoping to turn around and sell the licenses for a profit. Some licenses in small markets require as little as $10,000 in an up-front payment, Manjaro said.Still, for bidders with bigger aspirations, the sinking economy will likely harm their efforts, unless they already have secured funding.&#160;The recent collapse of Frontline Wireless, a company created by luminaries in the wireless industry to win 700MHz licenses, has raised concern among other bidders. &quot;They had a really strong team of players, and for them to not be able to secure the money shows the impact of the economy,&quot; Manjaro said.One difference in the rules for this 700MHz auction compared to previous contests that could affect individuals who participate is that bidders will be anonymous. That could cut back on potential collusion, a problem that many have said plagued previous auctions.Another auction change, however, likely works against the smaller players. This time, license winners have just four years to build out a portion of their networks. That&#39;s a relatively short amount of time for smaller winners to raise money and build a network.A number of other license winners from the C-Block PCS auction are also approved to bid in the upcoming auction. Bill McKell, CEO for Horizon Chillicothe Telecom, an Ohio telecommunications provider, is on the list. His company was one of the first winners from the C-Block PCS auction to launch a network, but it later&#160;returned the licenses to the FCC.These previous bidders seem prepared to go ahead with this auction despite warning signs that the market might not work in their favor, just like in the PCS auction from 1996. FCC Chairman Kevin Martin recently acknowledged that poor economic conditions could impact the auction because bidders might struggle to raise capital.But these smaller bidders must be gamblers. &quot;Sometimes you get lucky,&quot; McBride said.
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Open access advocates say an FCC plan for new spectrum doesn't go far enough to boost competition.
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Bids in the F.C.C.âs auction for wireless spectrum reached the governmentâs $10 billion goal. One problem: bidding for the biggest block of frequencies stalled at $4.3 billion, below the $4.6 billion reserve price.
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Investor's Business Daily - It's close but no cigar for Google in the Federal Communications Commission's much-anticipated auction of public airwaves, a process that could enable a new wave of wireless devices and services.
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Depending on who's talking, the wireless spectrum auction that starts on Jan. 24 will significantly change the mobile and wireless landscape in the U.S., or it won't have much impact at all.Some believe it will lead to creation of new nationwide wireless networks and the entry of new wireless operators. That increased competition could benefit users."This spectrum auction is the first real chance we've had to see a competitor emerge that could compete with the telephone and cable companies," said Gigi Sohn, president of the Public Knowledge consumer rights organization. Aggressive bidding is expected from several well-funded companies that aren't currently in the wireless business, such as Microsoft co-founder Paul Allen's Vulcan Spectrum and Google.Others, however, beg to differ. "The auction won't change anything per se," said Jack Gold, principal of J. Gold Associates, a telecommunications consulting firm. "But other pressures in the system -- market forces -- could ultimately change a lot of things." For example, Gold said he expects more competition and more open wireless networks to emerge over time, no matter who wins the auction.Besides the possibility of new competition, this auction is also receiving a lot of attention because it is likely to be the last time that large chunks of wireless spectrum will become available. Also with this auction, the Federal Communications Commission (FCC) has imposed rules that will, to some extent, open up wireless networks.However, a lot of confusion about the auction remains. Here are the answers to some frequently asked questions.What is being auctioned?The FCC is auctioning off a huge swath of wireless spectrum in the 700-MHz range. This spectrum has been used by television broadcasters, which must return the spectrum to the FCC when they switch next year from analog to digital broadcasts.In particular, the FCC is auctioning many "blocks" of spectrum. Two of those blocks, the so-called C-block and D-block, have enough capacity and geographical coverage to create nationwide wireless networks. The smaller blocks of spectrum also could receive a lot of attention from bidders. Those blocks are regional in nature, and many small telecommunications providers are expected to bid on them.How is the 700-MHz portion of spectrum different than others?The physical nature of the 700-MHz spectrum makes it attractive to users and service providers alike. Many digital cellular systems in the U.S. use radio signals in the 1,800-MHz and 1,900-MHz ranges, although some older analog systems still use spectrum in frequencies as low as 800 MHz. Because radio waves in the 700-MHz range are physically longer than higher-frequency radio waves, they travel farther and are better able to penetrate walls and other impediments.These characteristics are important for several reasons. First, the better penetration makes it feasible to use wireless services indoors. That makes these wireless services competitive with land-line broadband services such as Digital Subscriber Line and cable.A second important advantage is that, because radio waves in this portion of spectrum travel farther, it is easier to bring wireless access into rural areas that currently aren't well served by wireless providers. This greater transmission range also means that operators would need to invest less in towers and base stations and other wireless infrastructure.These advantages, combined with the nationwide coverage, explain why the available 700-MHz spectrum is often referred to in the media as "beachfront property."What technologies can be used in this portion of spectrum?Virtually any wireless technology that is currently in use can also be used in the 700-MHz range. That includes traditional and next-generation cellular service and other wireless broadband technologies such as WiMax.What potential benefits could come from this auction?Besides increased competition, the FCC decreed that the winner of the C-block must make networks that use that portion of spectrum available to any device that employs compatible technology. For example, if a carrier builds an EV-DO 3G (Evolution Data Optimized third-generation) network, any device with that technology built in will be able to access the network.This openness will increase consumer choice. Currently, cellular operators in the U.S. typically limit what devices can be used on their networks and what applications can run on those devices. Because this approach gives them so much control, the incumbent carriers fought the open network provision vigorously.Note, however, that this provision applies only to the C-block. Carriers that win any of the other blocks can continue to limit access to those networks.What other rules apply to the spectrum?The effort to open up new spectrum to all devices was led by Google and several public-interest organizations. In addition, those groups urged the FCC to require that the winning bidders make some spectrum available, on a wholesale basis, to other carriers. That was another attempt to foster more competition among wireless carriers. However, this effort failed. The FCC refused to require winning bidders to resell some of that spectrum although, as always, that could occur voluntarily.There are other limits on how the spectrum can be used. One notable mandate is that any network using the D-block must be built to specifications particular to public safety applications and that portions of the spectrum are available for those uses. Because of the emphasis on public safety, the D-block is mandated to be available to 99.3% of the U.S. population by 2019.There are limits on the other blocks, too. For instance, there are use-or-lose provisions that require wireless networks to be built out within a certain time frame or the license will be lost. This is an attempt to make sure that large companies don't buy spectrum simply to block other companies from acquiring it.Who is bidding?The auction has attracted some predictable bidders, some surprise bidders and many smaller bidders. More than 260 applications to participate in the bidding process were initially submitted to the FCC. The predictable companies included incumbent telecommunications operators such as Verizon Communications and AT&amp;T.Then, there are some well-funded bidders with unknown motives, such as petroleum giant Chevron and Vulcan Spectrum. Also in the mix are some cable operators.Besides the big players, many local and regional wireless carriers have applied to participate in the auction and are likely to bid on the regional chunks of spectrum. A local telephone company, for instance, could use such spectrum to provide wireless broadband service to its local customers using a technology like WiMax.What about Google's bid?The potential bidder that has received the most attention is Google, which has been mum about its specific plans. Most observers believe the company's interest in the auction is tied to its recently announced Linux-based Android mobile phone system.Google likely wants to use Android to sell mobile advertising. However, that won't be successful if existing wireless carriers don't allow phones based on it to be used on their networks. If Google owns the open C-block, it will be certain that phones based on its Android system can be used.Few, however, expect Google to create a whole new wireless network from scratch -- if it wins."Google will rent out the spectrum, said consultant Gold. "It would be insane on their part if they decided to put up their own network. Being landlords of the airspace, that makes sense."As a result, it is widely expected that, if Google wins the C-block, it will work with other providers. For instance, rumors have been circulating that Google will work with T-Mobile USA, which has been constrained in expanding its network by a lack of spectrum. Neither company has been talking about such specifics.How will the auction be conducted?A "mock auction" will be held on Jan. 22, and the auction will begin in earnest two days later. Many observers believe the bidding, which will be largely electronic, could last a couple of weeks.Bidding will be anonymous. That is to say, nobody will know who is bidding or how much they are bidding. The goal of this rule is to prevent collusion aimed at keeping out specific bidders."There are quite a few studies that show that, if you know who is bidding, you can engage in anticompetitive blocking behavior," said Public Knowledge's Sohn.How much will spectrum cost?Buying spectrum will require very deep pockets. In particular, the large, nationwide spectrum blocks will surely be expensive. The C-block, for instance, has a reserve, or floor, bidding price of about $4.7 billion. The total reserve price for all blocks is about $10 billion, and many believe the bidding will go much higher than that.
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The upcoming 700MHz spectrum auctions by the U.S. Federal Communications Commission (FCC)&#160;have drawn bid applications from giant companies including Google and AT&amp;T. But a number of small companies and individuals have submitted bid applications as well.
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Wireless carriers planning to offer next-generation wireless services have bid $13.9 billion in a spectrum license auction that ended Monday, the U.S. Federal Communications Commission (FCC) said.
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AT&amp;T hasn&#39;t decided whether it will bid for the highly desirable 700MHz band because it doesn&#39;t know if it can build a profitable business, given the open-access rules set for the wireless spectrum by the U.S. Federal Communications Commission in July.Calling the rules &quot;interesting,&quot; AT&amp;T&#39;s CEO Randall Stephenson said the company is hard at work crunching numbers and analyzing business scenarios, but hasn&#39;t reached a conclusion yet.&quot;Is there a business model there? I&#39;m not sure if there is or not,&quot; he said Friday at the&#160;Web 2.0 Summit, where he answered questions from conference chair John Battelle and from audience members.The FCC conditions, which include&#160;open-access rules on a third of the spectrum, have been a major source of controversy.The winner of 22MHz of spectrum must allow any wireless devices to connect to the network, permitting wireless telephone customers to use handset devices from other carriers. The winning bidder also can&#39;t block or slow down wireless and Web content from competitors.Some telecom carriers wanted no conditions, while some consumer advocacy groups and Google wanted the FCC to require that winning bidders also resell the spectrum at wholesale rates to competitors, something the FCC didn&#39;t adopt.The FCC is scheduled to auction 62MHz of spectrum in the 700MHz band beginning in January. The spectrum is ideal for long-range wireless telephone and broadband services, with signals that travel up to four times farther than in higher spectrum bands.&quot;It&#39;s a huge opportunity. It&#39;s beachfront property. When it comes to buying spectrum, it&#39;s the best you&#39;re going to find for a long time,&quot; Stephenson said.Data consumption on wireless networks is growing fourfold year over year, so a company&#160;such as&#160;AT&amp;T needs to bulk up on spectrum to keep up with the demand, he said.&quot;It&#39;s very obvious we&#39;re going to have to add to our spectrum holdings,&quot; he said.That&#39;s why AT&amp;T earlier this month reached an agreement to&#160;buy 12MHz of high-speed wireless spectrum&#160;in the 700MHz band from Aloha Partners for $2.5 billion.&quot;It&#39;s the first time, I think, that we&#39;ve ever paid $2.5 billion for a company that had no revenue,&quot; Stephenson said.The Aloha spectrum covers 196 million U.S. residents, including 72 of the 100 largest markets in the United States.In other matters, Stephenson said he was very satisfied with the&#160;iPhone deal between his company and Apple.&quot;I&#39;m not sure I could have asked for much more out of it than what we got,&quot; he said.Asked to comment on the decision to use the slower EDGE network for the iPhone, Stephenson said it was a request from Apple CEO Steve Jobs.&quot;He wanted a broad ubiquitous data network. The EDGE network is the only data network that covers the entire United States,&quot; he said. The situation will improve as AT&amp;T upgrades markets to 3G, he said.Stephenson acknowledged that AT&amp;T&#39;s directory assistance business is being challenged by ad-supported options from Internet companies&#160;such as&#160;Google.&quot;We better get our advertising-supported [directory assistance] model up fast,&quot; he said, adding that AT&amp;T is building such a service internally.On a lighter note, he said he&#39;s &quot;envious&quot; of Google and the success it has had with its business model. &quot;It&#39;s a great gig if you can get it,&quot; he said.(Grant Gross in Washington, D.C. contributed with this story.)
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More than 200 companies qualified to bid in the upcoming auction of public airwaves that could raise as much as $15 billion for the U.S. Treasury. But it's not clear whether any of those companies will fulfill one of the key goals of the auction -- to attract a bidder that would build a wireless...
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Verizon Wireless and T-Mobile are expected to be the most aggressive bidders for U.S. wireless airwaves in a January auction that analysts say could give them added resources to expand and improve service.
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AT&T hasn't decided whether it will bid for the highly desirable 700MHz spectrum band because it doesn't know if it can build a profitable business given certain rules set for the wireless spectrum by the Federal Communications Commission.
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With 36 rounds of bidding concluded Wednesday morning, the Federal Communications Commission auction of the highly coveted 700-megahertz band of the wireless spectrum has shifted to a faster-paced stage 2. Under rules designed to promote more competition, the number of new bids rose from 87 in Round 35 to 203 in Round 36.
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The U.S. sale of airwaves for  advanced wireless services grossed a record $13.9 billion when  it ended on Monday, and spectrum-hungry wireless carrier  T-Mobile USA, Verizon Wireless and a group of cable companies  were the highest bidders.