Interest intensifies during round 10, B Block reserve met: Copps: We have no backup plan if D Block remains untouched

Another couple of rounds, another $1.3 billion.

So went rounds nine and 10 of the Federal Communications Commission’s 700 MHz auction this morning, where potential winning bids for 989 of the 1,099 spectrum licenses up for grabs reached nearly $7.4 billion. And those participating in the auction remain on guard as round 10 witnessed 1,307 new bids, second only to the 1,849 bids posted during the opening round.

The big money is still on the package of eight C-Block licenses covering the 50 states. The package failed to receive a new bid during round nine, but picked up a bid in round 10 that pushed its potential winning bid to nearly $3.4 billion, which is 74% of the $4.6 billion reserve price that would trigger the open-access provision for all C-Block licenses. The minimum bid for the license beginning in round 11 stands at $3.9 billion, or roughly 85% of the reserve price.

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The potential winning bid for the C-Block package has pushed the price to 55 cents per megahertz/potential customer covered, according to Optimal Markets Inc.
The FCC’s blind bidding has made it impossible to gauge bidder activity, though analysts following the auction continue to believe the C-Block license has become a two-horse race between Google Inc., which has said it would bid at least the reserve price for the spectrum, and Verizon Wireless, which has never met spectrum it didn’t like and which most analysts expect to eventually win the spectrum.

B Block excitement

The most action during round nine and 10 continued in the South and West where the B Block covering San Diego received 21 new bids during rounds nine and 10, pushing its total price to $14.7 million or 44 cents per MHz/pop; the B Block covering San Antonio, which also received 21 new bids during the two rounds to push its price to $4 million or 21 cents per MHz/pop; and the B Block covering Phoenix that received 18 new bids to push its price to $14.2 million or 39 cents per MHz/pop.
The increased action in the B Block also pushed the aggregate proceeds of all B-Block licenses past the FCC’s $1.374 billion reserve price.

While interest remains high for the A-, B-, C- and E-Block licenses, the national commercial-public safety D-Block license again remained untouched during rounds nine and 10. The minimum bid for the D Block sat at $519.3 million at the end of round 10.

“Although it still may be possible for a bidder to emerge with significant eligibility remaining from activity in the lower blocks, we see it as increasingly likely that the FCC will need to re-auction the D-Block spectrum,” noted industry analyst firm Stifel Nicolaus in a research report following round eight.

Copps: No backup plan

At a press briefing this morning, FCC member Michael Copps reiterated his commitment to the creation of a national public safety broadband network even if a D Block winner fails to emerge from the 700 MHz auction.

“The protection of the people is always the first obligation of a public servant. We’ve got to the system built,” said Copps. “It’s going on seven years since 9/11. We don’t have public safety interoperable broadband network. We need to have that. We have to get it done. I am hopeful that we can get it done through this public safety-private sector partner approach. . We’ll have to look for a way to make it happen if it doesn’t evolve from this particular auction that’s going on right now.”

The FCC would be forced to revisit the D Block — particularly the accompanying public-safety conditions — if no bidder meets the $1.3 billion reserve price. At the moment, Copps, FCC Chairman Kevin Martin and other commissioners continue to hold out hope for a D Block winner.

“We have nothing before us in the way of a [backup] plan,” said Copps, when asked if the agency is developing a strategy on how it would respond to a D Block failure.

Copps, however, said if such an outcome materializes, “then we have to jump right back into the issue and go back to square one.”