FCC Names Winners of Wireless Auction

By Cecilia Kang
Washington Post Staff Writer
Friday, March 21, 2008

Verizon Wireless was the biggest winner in a federal auction of wireless airwaves and agreed to deploy a nationwide network that will give consumers more ways to use their cellphones and other wireless devices.

The Federal Communications Commission, which identified the winners yesterday, adopted rules requiring the winning bidder to build a network giving users more open access to the network. Carriers currently restrict which phones and which online services subscribers can use.

The openness rules could encourage more innovation, such as better video access over cellphones or home refrigerators that automatically order groceries online over a wireless network, some analysts said.

Prompted in part by calls for greater openness, Verizon has already taken steps in that direction. This week, the carrier said that by June, it could begin testing an array of devices with things like Global Positioning System or mapping capability.

The nation's two largest carriers, Verizon and AT&T, won 80 percent of the airwaves auctioned. Combined, they paid $16 billion of the $19.6 billion raised for the U.S. Treasury. AT&T pledged a total of $6.6 billion for licenses in many local markets.

The two carriers' increasing control over the nation's airwaves raised some concerns that smaller rivals will be left in a weaker position.

"While we won that battle for open access, we lost the war for competition and diversity," said Jonathan S. Adelstein, a Democratic FCC commissioner, adding that none of the bidders were companies owned by women and only 1 percent were owned by minorities.

Google, which doesn't operate its own network, didn't win any of the 1,090 licenses sold, but the auction met the minimum reserve bid of $4.6 billion that triggered the openness rules, according to the FCC. A more open network will help Google's users access their services in more places, the Internet giant argued.

"This could be very positive in bringing new kinds of devices and a lot more mobile computing, and we're already seeing the industry move more in this direction because of the auction," said Harold Feld, a senior vice president of Media Access Project, a public interest group.

But to ensure that Verizon abides by its promises, lawmakers and consumer-advocacy groups yesterday stressed the importance of regulatory enforcement of the openness conditions.

"This is the best spectrum that will probably become available in our lifetime, and who gets it? The same companies that are charging too much for text messaging, too much for ringtones and too much for service in general," said Chris Murray, senior counsel for the public interest group Consumers Union. The auction failed to create a new nationwide wireless competitor, he said.

But FCC Chairman Kevin J. Martin defended the auction, saying many smaller carriers won licenses in regional markets. The agency auctioned several blocks of airwaves; some were national, others covered local areas.

"The auction was a significant success not only in terms of the money raised," Martin said yesterday. "A bidder other than a national incumbent won a license in every market."

Other winners included Echostar and Microsoft co-founder Paul Allen, who, through his company, Vulcan, won two licenses in the Pacific Northwest for $112 million. Analysts said those airwaves are likely to overlap with Allen's cable operations.

Critics of the auction also pointed to airwave licenses that were not sold. The FCC hoped to auction a swatch of airwaves to a company that would build a nationwide network for public-safety groups. The sole bid for those airwaves was made by Qualcomm for $472 million, which was well below the agency's reserve price.

The FCC plans to re-auction the public-safety spectrum, possibly by the fourth quarter of this year, Martin said.

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