- The Washington Times - Friday, March 21, 2008

Verizon Communications Inc. is the big winner in the government’s auction of public airwaves, spending $4.7 billion on spectrum that covers the continental United States. The fate of what was supposed to be a national network for first responders, however, is unknown after its minimum bid went unmet.

A record $19.6 billion was raised as the Federal Communications Commission (FCC) sold 1,090 licenses to spectrum being vacated next February when television broadcasters switch from analog to digital signals.

Verizon Wireless, the second-largest U.S. carrier behind AT&T; Inc., must allow any device to operate on the network as a condition of the FCC’s rules for the nationwide “C” block that covers 49 states. Internet search giant Google Inc., a staunch proponent of the so-called “open network” rules, submitted a bid for the C block but ended up winning no licenses in the auction, which was conducted anonymously.

Large wireless incumbents spent the most, with Verizon shelling out $9.4 billion total, snapping up 25 additional “A” block licenses that cover medium-sized areas. AT&T; Inc. spent $6.6 billion on 227 regional “B” block licenses.

One new entrant, Frontier Wireless LLC, bought $700 million worth of spectrum to cover nearly the entire country. Frontier is owned by satellite provider Dish Network Corp.

“This auction will wind up having a transformative effect on the wireless industry,” said FCC Chairman Kevin J. Martin, who called it a “significant success.”

The auctioned spectrum is located in the valuable 700 megahertz band, which is well-suited for wireless broadband because the signals can travel far distances and penetrate walls.

Mr. Martin said small businesses won 379 licenses, or about 35 percent of those for sale. At least one bidder other than the incumbent won a license in each market, he added.

“There is the potential for an additional wireless ‘third pipe’ in every market,” he said.

But not all went as hoped. Chip maker Qualcomm Inc. was the sole bidder for the single nationwide “D” block license, the winner of which would be obligated to partner with public-safety officials on a national emergency communications network. But Qualcomm’s bid of $472 million fell far short of the FCC’s reserve price of $1.3 billion.

“I still think that trying to solve the interoperability challenges public safety faces is critical,” Mr. Martin said, adding that the commission is considering its options regarding the D block. He said the agency will likely alter the conditions attached to the license and put it up for sale by the end of the year.

Mr. Martin has asked the FCC’s inspector general to investigate complaints that a group representing public-safety officials might have discouraged bids by demanding that the winner make lease payments on the spectrum.

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