700 MHz auction starts with bangs, whimpers

Bidding sluggish for nationwide 700 MHz licenses but intense for regional, local spectrum

As Auction 73 shut down after its first week, things didn’t look good for the planned public safety/private network. After attracting a $472-million bid in the auction’s opening round, it has languished through round 4 as the other nationwide band, block C, and the individual market licenses attracted all of the attention.

At the end of the fourth round, the auction had racked up $3.71 billion in bids on 921 of the 1099 total licensees. The C block, to which the FCC’s open access requirements are attached, is now up to $1.79 billion, having received a single bid in each of the four rounds. But the big battles are being fought on the local level, particularly in the country’s three largest cities: New York, Los Angeles and Chicago. (See the FCC’s Auction 73 page for full bid results and check Telephony’s Unfiltered blog for regular updates on the status of the auction.)

Three licenses centered on Manhattan have scored the highest bids for regional licenses. One Block A economic area license, covering the entire New York metro area from eastern Pennsylvania to southern Vermont, has been bid up to $143 million. Another license covering the same region but with half the spectrum has received bids up to $71.9 million. A Block B local license just covering Newark and New York City proper has reached the $100 million plateau. In all likelihood those initial bids will be mere fractions of the final winning totals. Instead of one bidder offering up the minimum bid in each round, multiple competitors are submitting bids each round, quickly driving up their prices. The New York Block B license alone received six bids in round 4.

New York traditionally has hosted many suitors for its sparse spectrum. In 2004, Verizon Wireless agreed to pay NextWave $903 million for a single 10 MHz license in the Big Apple and then shelled out another $3 billion for a package of licenses centered around 20 MHz in NYC. The city’s high density and high wireless adoption make network planning an arduous task, and cells can only be split so far in such an environment.

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