Federal Spectrum Auction Underway, Already Past $10 Billion in Bids

WASHINGTON – A key benchmark was reached Thursday in the ongoing government airwaves auction, triggering a provision that the government says will lead to greater freedom and flexibility for cell phone subscribers.

The "open-access" provision will allow subscribers on about one-third of the publicly owned spectrum to use any phone and any type of software they choose on the resulting network.

At the same time, another block of airwaves designated for the creation of a national public safety network has not received a bid since the first round, endangering the viability of the plan.

The open-access spectrum, known as the "C block," received a bid of $4.63 billion Thursday through 17 rounds of bidding, exceeding the $4.6 billion minimum bid required to trigger the consumer-friendly provisions.

Overall, the auction had drawn $13.7 billion in bids by midday, just shy of the largest amount ever raised in a spectrum auction.

More importantly, the auction has raised more than $10 billion, an amount Congress had already committed for deficit reduction and other purposes. Proceeds must be deposited by June 30, according to the law.

The C-block bid was a personal vindication for Federal Communications Chairman Kevin Martin, who endured intense criticism from wireless companies and others for pushing the provision, which is backed by search-engine giant Google Inc.

"This is, I think, an important transformation for the auction and the wireless industry," Martin told reporters Thursday.

The chairman noted criticism last summer regarding his plan that the conditions on the spectrum block would "devalue the spectrum" and that "no one would want to participate."

The chairman declined to speculate on what might happen with the public safety spectrum dubbed "D block", which requires a $1.3 billion bid, until the auction is over.

"I'm not ready to give up yet on the D block," he said, when pressed. "I think we've got a long way to go yet on the auction."

The winning bidder in the spectrum block is required to work with a public safety organization to build a shared nationwide communications network.

The chairman noted that the auction was expected to exceed the previous record for most money raised and in far less time. In late 2006 $13.9 billion was raised in an auction through 160 rounds of bidding for nearly one-third less spectrum.

Martin has called the auction a "key building block" in making wireless Internet service competitive with cable and DSL (digital subscriber line) offerings, allowing customers to do things like watch TV shows and transmit loads of data "wherever and whenever" they want.

But concerns persist regarding the public safety block, despite the chairman's optimism.

Rep. Ed Markey, D-Mass., said at a hearing this week that the "initial reports of lagging interest" in the block are "discouraging."

Markey said if the auction ends without the minimum bid being reached, that the telecommunications subcommittee he chairs will work with the agency to "develop a plan for re-auctioning these frequencies in a way that will foster new wireless competition and enhance interoperable, public safety communications across the country."

The identities of the top bidders thus far are not being released. But analysts have speculated that the two most likely bidders vying for the C block are Google and Verizon Wireless.