D-Block Attracts Bidder as 700 MHz Auction Starts
After the first two rounds of bidding late Thursday, auction participants had made $2.8 billion in provisional winning bids, up $350 million from round one, as the long- awaited 700 MHz auction started. At least one company bid for the nationwide D-block public safety license, the one pursued by Frontline Wireless before the company announced it wouldn’t take part in the auction. But at $472 million, the bid for the D-block is well below the $1.3 billion reserve price set by the commission.
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One participant bid in the first round for a package of large regional C-block licenses taking in the entire continental United States. Bidding was active for the smaller A-block and B-block licenses, most likely to be pursued by small and midsized carriers. There were 895 provisional winning bids. None of the results mean much at this point since auction participants can shift bids among blocks. Unlike in previous auctions, the FCC isn’t identifying bidders.
“There were few surprises,” Stifel Nicolaus concluded in comments on round one. “We remind investors that the early stages of the auction are not representative, in that there is typically more early activity on the larger licenses in order to maintain bidding eligibility. And it is likely that we will not know until around round 12, or next Wednesday, whether the open access condition for the C-block has been triggered with the $4.6 billion reserve price.”
Michael Calabrese, vice president at the New America Foundation, said tight credit markets and “bad policy choices” mean telecom incumbents will likely walk away with most of the licenses. “The FCC imposed multi-billion reserve [minimum] prices on the spectrum, which will shut out all but the biggest companies, resulting in no new competition,” he said. “The auction’s major wild card is Google. Even if Google is outbid in the end, they could transform the wireless marketplace by bidding at least $4.6 billion, the reserve price that triggers open access and consumer choice conditions that the FCC has imposed on the winner of the largest, nationwide block of spectrum [the C block]. Google’s bidding behavior will determine if this auction opens wireless networks so consumers have a choice of devices, software and content in the future.”