Bidding Slow For 10-Megahertz D-Block Airwaves in FCC Auction

WASHINGTON -(Dow Jones)- One of the largest sections of communications airwaves being sold by the Federal Communications Commission has received only one bid after four rounds of an auction, according to information released by the agency.

The 10-megahertz section, which is known as the D-Block and will grant the winner a national license, received the minimum bid of $473 million from a company whose anonymity is required, in the first round of the auction Thursday morning. However, in the subsequent three rounds, the D-Block had not received any further bids.

Whoever wins the license is obliged to cooperate with the public safety community to build a wireless broadband network for use by the country's police and firefighters.

The licensee would then be able to sell any spare capacity on the network to the commercial wireless industry.

"There has been skepticism that the FCC can raise $1.3 billion in the auction," said Paul Glenchur, an analyst with the Stanford Research Group.

The FCC set a $1.3 billion minimum final price for the D-Block. If that amount isn't raised, the sale will be forfeited and the agency would have to convene another sale of the airwaves.

"After Frontline Wireless closed shop two weeks ago, people would be more surprised if the minimum was raised than if it wasn't," said Glenchur.

Frontline was a telecommunications venture that abruptly went out of business two weeks ago. It had been expected to bid competitively for the 10-megahertz section of spectrum.

Despite the slow start for bidding of the D-Block, overall bids for the 1,009 auctions of all the airwaves being sold were off to a strong start, raising $3.7 billion after four rounds.

That would appear to be well on the way to meeting the FCC's target of $10 billion raised through the auctions.

The largest section of spectrum that is also for a national license has seen bidding in each of the four rounds. So far $1.8 billion has been bid for the 22-megahertz chunk, known as the C-block.

The minimum final price for this piece of spectrum is $4.6 billion. Due to the size of this price tag, bidding for it is likely to be limited to large companies like AT&T, Verizon Wireless or possibly newcomer Google.

Of the city or regionwide licenses, bidding for a license in New York and the surrounding area has reached $144 million.

The information was released on a Web site set up by the FCC to release auction results. The auction rules state that no information will be released as to how many bidders are vying for each license or who the bidders are.

The auction of 62 megahertz of prized radio spectrum to the commercial wireless industry is the first time the "blind bidding" rules have been instituted by the regulator.

Other bidders in the auction include Alltel Corp., which was recently taken private by Goldman Sachs Group and TPG Capital; privately owned Cox Communications; Echostar Communications; and a venture owned by Microsoft co-founder Paul Allen.

The FCC sale is possible due to a move by television broadcasters from analog to digital signals next year, which require far less spectrum.

The airwaves being sold are some of the most powerful to ever become available to wireless carriers. They can transmit across vast distances and through buildings, making them highly sought after by wireless companies.

According to official government estimates, the auction is expected to raise around $10 billion when it is completed.

Winners in the auction will use the airwaves they acquire to build networks to support the next generation of wireless broadband service known as fourth-generation, or 4G, service.

Bidding will recommence Monday and continue until a winner emerges for all the licenses.

An auction in 2006 took more than 100 rounds to complete, so it could be several weeks before this auction is completed.

-By Corey Boles, Dow Jones Newswires; 202-862-6637; corey.boles@dowjones.com

(END) Dow Jones Newswires

Posted to the site on 26th January 2008