FCC's Martin Trumpets Success of Auction, Points to Open Access

WASHINGTON -(Dow Jones)- Federal Communications Commission Chairman Kevin Martin lauded the success of the agency's auction of prized communications spectrum Thursday as the "open access conditions" on the largest section of airwaves were triggered.

A bid in Round 17 of the auction Thursday morning passed the crucial $4.6 billion mark, the minimum price tag attached to the C-Block, a 22-megahertz swath of spectrum.

An anonymous company bid $4.71 billion for the section of spectrum in the round.

"The auction has now met the reserve price in the C-Block," said Martin. "This is an important transformation for the wireless industry."

Martin was speaking to reporters at a hastily convened press conference at the agency's Washington D.C., headquarters.

The Republican chairman also pointed to the fact that it seemed likely that bidding in the auction would pass by highest amount ever raised through an FCC auction later Thursday.

"It will probably exceed any other auction that we have had in the past," said Martin.

So far, $13.65 billion has been committed to the auction by potential bidders, slightly less than the $13.8 billion raised in a spectrum auction in 2006.

Congress has already allocated $10 billion of the money from the proceeds of the auction. Anything about that will be a windfall for the U.S. Treasury.

Martin sounded defiant about the lack of bidding for another section of the spectrum being sold, known as the D-Block.

A winner for that 10 megahertz of spectrum would be obliged to work with public safety to build a national wireless broadband network for use by the country's police and firefighters.

The licensee could then lease spare capacity on the network to the commercial wireless industry.

But through 17 rounds of the auction, only one bid for the D-Block was made, and that for the minimum amount allowed of $472 million.

Unless $1.3 billion is bid for the section, the FCC has said it would forfeit the sale. It would then have to decide whether to strip the conditions from the spectrum or alter them somehow to try and drum up interest in the airwaves.

"I'm not ready to give up yet on the D-Block," said Martin.

He wouldn't say what the commission would do if the minimum price tag wasn't met, other than to say he would work with Congress to determine the best way forward.

Martin did say that unlike for the other blocks, the Commission hadn't said that it would remove the conditions if the minimum reserve price wasn't met.

The triggering of the open access conditions on the C-Block will be the first time that the federal government has mandated conditions of this nature on spectrum it has sold off.

Currently, U.S wireless carriers impose significant control over the types of handsets and software that can be used on their networks.

Both AT&T and Verizon Wireless have made recent commitments to move away from this business model and allow greater openness to all of their wireless customers.

In total, 62 megahertz of spectrum is being sold by the FCC.

Other potential 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 next year by television broadcasters from analog to digital signals, 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.

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.

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

(END) Dow Jones Newswires

Posted to the site on 31st January 2008