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The FCC's 700MHz auction: what you need to know

The FCC's 700MHz auction: what you need to know
Chris Ziegler
Chris Ziegler|January 24, 2008 12:01 AM

Alright, alright, everyone calm down -- yes, today marks the beginning of 2008's Super Bowl of wireless spectrum auctions, but unfortunately, there won't be much to see. No 24-hour television coverage of the intense action, no live webcams of the FCC's wacky, wild, no-holds-barred trading floors; heck, not even an official update from the Commish or any of the bidders. Why's that? Glad you asked. Let us quickly break down what the auction's all about and what it means to you:

  • The auction, known officially as Auction 73, is made possible by the move from analog to digital television, which frees swaths of bandwidth in the 700MHz range.
  • This represents one of the last frontiers of nationwide RF spectrum that is expected to be available and practical for consumer use any time soon, which has generated intense interest and even more intense scrutiny.
  • In an effort to stem collusion, the FCC is being extremely secretive about the applicants for bidding, saying only that there is a total of 214 bidders involved. They've also told bidders that they aren't allowed to publicly disclose anything about the auction or their bids before the auction's over, lest they forfeit the whole shebang.
  • We do know that AT&T, Verizon, Cox, and most famously, Google are all committed to bidding.
  • Auction 73 is broken into a total of five "blocks." Block C is by far the most coveted of the five because it contains the most bandwidth -- 22MHz in total, broken into two 11MHz pairs -- and also because it consists of fewer regions, making it easier to assemble a contiguous, nationwide network. Blocks A, B, and D should see some action, too, while Block E is the redheaded stepchild of the bunch with only one 6MHz piece of spectrum to its name.
  • The FCC has ordered that the winner of the Block C auction must commit to creating an open-access network, meaning any device capable of supporting the appropriate protocols must be allowed to connect and enjoy 700MHz bliss.
  • Bidding begins today, January 24, in two consecutive rounds. Starting tomorrow and each business day thereafter, there will be a total of three bidding rounds. After each round concludes, the FCC will disclose to bidders the current asking price for each block without revealing anything about the winning bidders. Bidding continues indefinitely until no additional bids are placed.
  • The reserve price for Block A is $1.81 billion; Block B, $1.37 billion; Block C, a whopping $4.64 billion; Block D, $1.33 billion, and Block E, $904 million. If at the end of bidding any reserves have not been met, a new auction, Auction 76, will automatically be spawned. The FCC's open-access requirement on Block C would be dropped if it makes it through to Auction 76, fueling rumors that Google intends to bid it up to the reserve price then drop out. The date and new reserve prices for the remaining blocks would be decided when (and if) it's determined that Auction 76 is necessary.
  • There is no "Buy it now!" button, we hear, and the FCC has a stellar feedback rating. Don't worry, bidders, the FCC isn't going to screw you on shipping and handling for the wireless spectrum you've already paid top dollar for.
So there you have it. As dry as that summary may be, it pales in comparison to the piles upon piles of literature the FCC has generated (as one might expect from a government bureaucracy of the highest order) and it's really about as boiled down as we can get it for the moment. We won't know who won, where the bidding stands, or what firms plan to do with their blocks until the conclusion of the auction -- a conclusion that could come tomorrow, next week, or next month. Rest assured, though, we'll have plenty more coverage as soon as this all shakes down.