IT’S OVER: 700 MHz auction ends after 38 days, 261 rounds: Event generates record $20B in provisionally winning bids

It took 38 days and 261 rounds, but the Federal Communications Commission’s 700 MHz spectrum auction came to an end this afternoon, having raised $19.592 billon for the U.S. treasury. The haul is a record for an FCC-run auction and nearly double the high mark of some pre-auction estimates.

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However, the most pressing question — who won what? — will remain unanswered, at least for the time being. The FCC has said it expects to release the names of license winners within 10 days after the close of the auction.

FCC Chairman Kevin Martin said, in a conference call immediately after the close of the auction, that he sent an order to the other FCC commissioners to “delink” the failed D Block from the 700 MHz auction so the auction can be officially closed.

Once the commission approves the move, the names of the 700 MHz winners can be released “almost immediately.”

The FCC, in a departure from past practice, did not identify the names of top 700 MHz bidders at the close of each round. Instead, it released only the amount of the top bid for a particular license in each round. Thus, it’s unclear whether high-profile bidders such as Google Inc. and AT&T Mobility managed to walk away with spectrum.

The anonymous bidding technique was intended to prevent anti-competitive activity during the auction.

C Block interest

Highlights of the auction, dubbed Auction 73 by the FCC, included a battle over the valuable C-Block licenses. The C Block carried a $4.6 billion reserve price that was surpassed during round 17, which triggered the spectrum’s open-access provision. The provision requires the winner, or winners, of the C-Block licenses to allow access to any device compatible with the network’s chosen technology.

The 12 regional C-Block licenses generated some of the largest individual bids during the 700 MHz auction, with the licenses covering the Mississippi Valley region generating a provisionally winning bid of $1.6 billion.

Although bidders had the option of chasing a nationwide package of eight C-Block licenses — and during the auction that configuration did receive quite a bit of interest — the C Block ended up split into 12 regional blocks. Thus, there is likely more than one C-Block winner.

The C Block’s open-access provision was initially championed by Google, which said it would bid at least to the minimum reserve for the C Block. However, analysts generally predict that it’s Verizon Wireless or AT&T Mobility that will walk away with the C-Block spectrum.

According to Optimal Markets Inc., the average price per megahertz/potential customer covered in the C Block covering the Mississippi Valley region at the end of the auction was $2.36. Average price per MHz/pop is generally recognized as an indication of the value of spectrum.

The average price per MHz/pop for the entire C Block was $0.76. The B Block’s average price per MHz/pop was $2.68, and for the E Block it was $0.74.

D Block troubles

Despite its massive haul, the 700 MHz spectrum auction did carry one black eye: the national commercial-public safety D-Block license. The license generated only one bid during the auction, falling well short of its $1.3 billion reserve price. Under the FCC’s auction rules, the D Block was supposed to be shared between public-safety and consumer users, with first-responders having priority access during emergencies. The D Block winner was to have to negotiate a network-sharing agreement with Public Safety Spectrum Trust Corp., the non-profit first responder D Block licensee. Frontline Wireless had voiced interest in the D Block before the company’s implosion.

The FCC now has to decide what its next move will be with the D Block: re-auction it with a lower reserve price or alter the buildout requirements. Analysts have noted that the auction’s record-setting haul could stall the need for a quick decision.

House telecom subcommittee Chairman Edward Markey (D-Mass.) said he plans to hold a hearing to discuss results from the auction, including plans for the D Block.

“I believe that any new auction for the ‘D-block’ should be consistent with an overarching policy goal of advancing public-safety objectives and ultimately achieving a state-of-the-art, broadband infrastructure for first responders. In developing a plan for a re-auction of the ‘D-block,’ the FCC should also take into account the auction results to gauge the level of new competition achieved. Policymakers should also analyze whether a need for a high reserve price continues to exist. Moreover, I believe we must fully review the nature and authority of the public safety spectrum trust and whether this model should be retained or modified, the length of the license term, the build-out requirements and schedule of benchmarks for such build-out, the opportunities for ensuring further openness in wireless markets, the penalties associated with failure to fulfill license conditions, and other issues,” Markey said.

The 700 MHz auction opened with a bang — $2.4 billion in provisionally winning bids in the first round — but ended with a whimper. Bidding in the final rounds generated just a few hundred thousand dollars per round, and centered on tiny, out-of-the-way locales such as Vieques, Puerto Rico.

Of the 1,099 licenses up for auction, eight remained without a bid: A-Block licenses covering Lubbock, Texas, and Wheeling, W.Va., and B-Block licenses covering Bismarck, Fargo and Grand Forks, N.D.; Lee, Va.; Yancey, N.C.; and Clarendon, S.C.

“While the license winners of the 700 MHz auction may not yet be known, the true winners in this auction will be American consumers who once again will get to experience the innovation and other valuable benefits of a truly competitive wireless marketplace,” said Steve Largent, head of CTIA.