The Associated Press
By John Dunbar
WASHINGTON — Bidding closed Tuesday on a record-setting government airwaves auction with the total amount pledged reaching nearly $19.6 billion. But enthusiasm in the result was tempered by doubts concerning the future of a proposed emergency communications network.
The total was the most since the Federal Communications Commission began using auctions in 1994 as a way to decide who should be granted rights to use portions of the publicly owned airwaves.
The agency used an anonymous bidding process and the identity of the winners won’t be known for at least three weeks.
About one-sixth of the spectrum at auction was dedicated to the creation of a nationwide, emergency communications network for first responders. But the so-called D block did not attract the minimum bid required by FCC auction rules.
The agency now must decide how to alter the conditions attached to the block to make it more attractive to bidders in another auction while still maintaining its purpose as a resource for emergency responders.
FCC Chairman Kevin Martin in a conference call with reporters Tuesday declared the auction a success and reaffirmed his support for the public safety network.
“I believe the commission still is committed to trying to work to solve public safety’s interoperability challenges, but we will have to evaluate our options on what we can do about the D block and how we can move forward on that one piece of spectrum,” he said.
The Congressional Budget Office predicted the auction would raise between $10 billion and $15 billion. The airwaves are currently being used by television broadcasters who must vacate the spectrum by Feb. 18, 2009 as part of the nationwide transition to digital television.
Despite the concern over the public safety block, the auction did attract enough interest to trigger an “open-access” provision, pushed by FCC Chairman Kevin Martin. On about one-third of the airwaves, subscribers will be able to use any phone and any type of software they choose, as long as they don’t damage the network.
Martin said the success of the provision is good for consumers and will lead to innovation “on the edges of the network.”
Bidding went on for 261 rounds over nearly eight weeks. A total of 1,090 licenses were available.
In an effort to prevent collusion among bidders, the identities of the winners of each round were kept secret. The auction rules are unclear about when the names can be released.
But Martin told reporters he had circulated an order at the close of the auction among his fellow commissioners that would “de-link” the D block from the rest of the auction, meaning the names of the winners could then be released. But that won’t happen for at least three weeks, he said.
As for the D block itself, Martin said the commission will start a new process on how to craft new rules for it with the help of Congress and other parties.
Rep. Edward J. Markey, D-Mass., chairman of the House Subcommittee on Telecommunications and the Internet, said he will conduct a hearing on the auction. Markey questioned “whether a need for a high reserve price continues to exist” for the block. For a bidder to win the license, a minimum bid of $1.3 billion was required.
The agency has until June 30 to deposit the auction proceeds according to law. The date does not apply to the D block if the commission votes to de-link it, Martin said.
While the agency has hosted numerous auctions in previous years, this one received more attention than usual.
The spectrum allows signals to travel long distances and easily penetrate walls, meaning fewer cell towers are needed to build a network.
Google Inc.'s lobbying efforts during debate over the rules also raised the event’s profile as speculation raged about whether the Internet giant was preparing to enter the cellular telephone business.
Google lobbied heavily for the open-access provision because it wants cell phone customers to be able to use its search engine and other products, analysts have said.
While the success of the open-access provision is considered good news for consumers, the bad news is it appears that no new nationwide wireless competitor will emerge from the auction.
The open-access spectrum, known as the “C block,” included a package-bidding option that would have allowed a company to obtain a nationwide spectrum footprint with a single bid. One bidder made a play for the 50 states package, but it was too low.
But with no word on the identities of the bidders, there’s no way of knowing whether a new national wireless player will emerge or not.