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Verizon, AT&T Are Big Winners in FCC Auction

Verizon, AT&T Are Big Winners in FCC Auction
March 21, 2008 9:45AM

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FCC says smaller companies will foster competition with 700-MHz wireless-spectrum wins, but Verizon bagged 108 licenses and AT&T got 227. Google risked $4.7 billion to get open access for its Android mobile platform on the Verizon and AT&T wireless spectrums. Verizon spent $9.6 billion, and AT&T $6.6 billion as the FCC raked in $19.59 billion.


The Federal Communications Commission auction for the 700-MHz wireless spectrum is over, and the winners are known. One obvious winner is the FCC itself, which exceeded its initial estimate of $10 billion with a $19.59 billion total.

Among the bidders, Verizon Wireless and AT&T Relevant Products/Services won big portions of the available spectrum, which is being vacated as U.S. television stations move to digital transmission.

Google a Big Winner, Too

Verizon took 108 licenses for $9.6 billion, and AT&T bagged 227 for $6.6 billion. Observers say Verizon's purchases will help it narrow a gap in coverage as it competes with AT&T.

One potentially big winner is Google, even though it didn't win any bids. It bid $4.7 billion for the C-block frequencies, which triggered an auction requirement that any third-party compatible device or software must be able to operate on the bandwidth. That was one of the open-network Relevant Products/Services provisions that Google, as head of an alliance of consumer organizations and businesses, was able to have adopted by the FCC.

Verizon, which backed an open-network position shortly before the auction, bought the C-block license.

Dish Network took 168 wireless licenses for $711 million, although it was not immediately apparent what it intends to do with them. Some observers are speculating it might be for a video service Relevant Products/Services of some kind, but the company is prohibited from discussing its plans until it makes the down payment on April 3.

One setback for the FCC was the auction of the upper 700-MHz D block. Earlier this week, the agency separated that block from the rest of the auction and said it will "consider its options for how to license this spectrum," since bids did not meet the $1.3 billion minimum. The D block was established to create a public-private partnership that would guarantee public-safety agencies bandwidth access in emergencies.

Impact on Consumers

The impact on consumers is not yet clear. The open-network provisions, plus the new open-access stances of the major companies, may lead to a more robust third-party ecosystem of devices and software. The new environment also means that the Google-backed, open-source Android platform for mobile devices may now have access to bandwidth, even if the Android device makers or software providers are not carriers.

Some observers said that, because the two biggest carriers increased their position, the prospects of dramatically lower prices for consumers or businesses are not huge.

But the FCC said the auction increased the potential for market competition. It said "a bidder other than a nationwide incumbent won a license in every market," and there is now "the potential for an additional wireless 'third-pipe' in every market in the nation." It also noted that 99 bidders who are not nationwide wireless incumbents won 754 licenses, or about 69 percent of the 1,090 licenses offered.

Bill Ho, an analyst with industry research firm Current Analysis, said he "kind of expected Verizon and AT&T to win." They're the biggest, he noted, and, for an event that had become known as "the chance of a lifetime," the biggest players had to step up.

Ho said "Google had an agenda," to get bandwidth access for itself and others, and it accomplished that. Ho pointed out that Google's core competencies have not involved running a network, and now it can concentrate on a strategy of delivering services, including Android, to mobile devices.

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