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Posted at 01:25 PM ET, 09/28/2012

FCC moves ahead with airwaves auction

The FCC on Friday took a preliminary step forward with a plan to auction television airwaves for wireless networks that run smartphones and tablets.

The five-member Federal Communications Commission approved a proposal for how the auction of broadcaster’s airwaves will be collected and then resold to eager wireless carriers. The airwaves will be used to expand mobile broadband Internet networks and beef up coverage where carriers already operate to meet the explosive growth of mobile Internet use.

The FCC’s move is the first step in a long and complicated process that could take at least three years before consumers see any difference in their wireless service, analysts say. The agency will take public comments on its proposal before voting on a final rule. The FCC aims to begin its auction to wireless carriers in 2014.

“There is a vital need to free up spectrum,” FCC Chairman Julius Genachowski said at the commission’s monthly meeting. “Demand is rapidly exceeding supply, and mobile traffic is projected to grow.”

There are many components to the FCC’s proposal, and many analysts question its success.

Broadcasters will first be asked to voluntarily sell airwaves. The FCC then has to repackage channels to prepare the spectrum for auction. Then the FCC will conduct its auction to sell the airwaves and hopefully raise billions of dollars that will be used to build a separate network for public safety emergency first responders and fatten the coffers of the U.S. Treasury.

Smaller carriers and public interest groups have asked to give preference for competitors to the biggest providers AT&T and Verizon Wireless. The FCC on Friday also approved a proposal to consider new caps on how much spectrum any single carrier can own in a given local market.

“It is no coincidence that immediately after the FCC scuttled its previously-imposed spectrum caps a decade ago, the mobile wireless industry entered into a phase of hyper-consolidation that has winnowed down the choice of service provdiers available to Americans,” said Carri Bennet, general counsel of the Rural Telecommunications Group.

But first, it’s unclear what spectrum will be up for grabs.

“We expect many smaller broadcasters to participate in the reverse auction, as it is a good opportunity to monetize underutilized spectrum licenses,” James M. Ratcliffe, an analyst at Barclays Equity Research wrote in a report. “However, we also believe the portfolio of those spectrum licenses will be uneven in size and geographic coverage, given that broadcasters will decide individually what they are willing to give up.”

It will be the first major auction of public airwaves since 2008, when the FCC raised nearly $20 billion after giants Verizon Wireless and AT&T snapped up choice blocks of spectrum that they are now using to fuel their mobile 4G high-speed Internet networks.


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By  |  01:25 PM ET, 09/28/2012

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