Verizon Wireless wins large chunk of 700MHz spectrum

Company prevails in FCC auction with $4.7 billion bid for the C block, a nationwide block of spectrum; other winners include AT&T and Qualcomm

Verizon Wireless has won a nationwide block of spectrum that could be used to create a wireless data network, the U.S. Federal Communications Commission announced Thursday.

Verizon was the winning bidder in the 22MHz band of spectrum called the C block in the FCC's 700MHz auction, which concluded Tuesday. The company bid $4.7 billion for the spectrum, which covers nearly all of the United States, while the high bids on the entire 700MHz auction totalled nearly $19.6 billion.

The FCC put so-called open-access provisions on the C block, meaning Verizon must allow outside devices such as mobile handsets from other carriers and must allow users to run outside applications on the network. Verizon originally filed a lawsuit against the FCC's open-access rules, but dropped out while trade group the CTIA continued with the lawsuit.

Google, which had expressed interest in the C block, did not win any of the C-block licenses.

Verizon said it was "very pleased" with the auction results. "Specifically, we were successful in achieving the spectrum depth we need to continue to grow our business and data revenues, to preserve our reputation as the nation's most reliable wireless network, and to continue to lead in data services and help us satisfy the next wave of services and consumer electronics devices," the company said in a statement.

Among the other winners in the 700MHz auction was AT&T, which won spectrum covering the metropolitan areas of New York, Philadelphia, Detroit, Dallas, Boston, San Francisco, Washington, D.C., and dozens of other large cities. Qualcomm won spectrum covering New York City, Philadelphia, Boston, Los Angeles, and other areas.

Public Knowledge and Free Press, groups that had pushed for the open-access rules, gave mixed reactions to the auction's results.

"We are not surprised" at the auction's results, said Art Brodsky, Public Knowledge's spokesman. "We look forward to the company working within the letter and the spirit of the open-access policies the commission approved," he added."Perhaps they could even persuade CTIA to drop their court challenge to the auction."

The spectrum auction raised more than the $10 billion budgeted by the U.S. Congress, but failed to provide a public safety network and failed to create a new wireless competitor to cable and telecom-based broadband providers, said Ben Scott, policy director of Free Press.

"The auction also failed to produce a much-needed competitor to the phone and cable giants," Scott said in an e-mail. "Since Verizon -- winner of the C Block -- is already a dominant provider of DSL, the prospect of a genuine third pipe from the wireless world is now slim to none."

On Thursday, the FCC voted to de-link the so-called D block from the rest of the auction results. The D block was a 10MHz block that was to be paired with another 10MHz controlled by public safety agencies, and the winning bidder would have been required to build a nationwide voice and data network to serve both public safety and commercial needs. But the FCC failed to receive its $1.33 billion minimum bid for the D block, with the lone $472 million bid coming from Qualcomm.

The FCC has no plans to immediately reauction the D block, a spokeswoman said. Instead, the agency "will consider its options for how to license this spectrum in the future," the FCC said in a news release.

Many members of Congress pushed for a public safety network after emergency responders couldn't communicate with each other during the Sept. 11 terrorist attacks and more recent disasters. Police and fire departments in neighboring cities often use different communication devices on different blocks of spectrum.

Many telecom experts see the 700MHz spectrum, which U.S. television stations are required to abandon by February 2009, as optimal for long-range wireless broadband services. Wireless signals in the 700MHz band travel three to four times farther and penetrate obstacles such as buildings more easily than wireless signals in higher-spectrum bands.

Other auction winners included Triad 700, a Silicon Valley startup, which won spectrum covering Alaska, Puerto Rico, eastern Maryland, and northwestern Pennsylvania. Frontier Wireless, a Colorado-based subsidiary of EchoStar Communications, and Cavalier Wireless, which has bid in past FCC auctions, won several licenses in small cities and rural areas.

Copyright © 2008 IDG Communications, Inc.