FCC Delays Spectrum Auction—Again

The Federal Communications Commission postpones the auction of the entangled 700MHz frequencies for the sixth time.

Waiting until the last minute before wireless companies were required to deposit hefty sums of cash to hold their places in the next big spectrum auction, the Federal Communications Commission postponed the auction of the entangled 700MHz frequencies late last Friday for the sixth time.

Bowing to the demands of the wireless industry, the FCC delayed the auction, previously scheduled to open June 19, until Jan. 14, 2003. The commission long ago dismissed a direct mandate from Congress to deposit the auctions proceeds in the U.S. Treasury by September 2000. As eWEEK reported last week, the latest postponement was not entirely unanticipated given the commissions historic inability to set the schedule for this spectrum auction with certainty.

FCC Chairman Michael Powell had earlier indicated that he did not intend to delay the auction for a sixth time without a new mandate from Congress. The House of Representatives passed a bill this month directing the commission to delay the auction indefinitely, but conflicting bills are pending in the Senate. In a prepared statement, Powell said he saw a compelling reason to give lawmakers more time to resolve the matter with new legislation.

"I have reluctantly concluded that the best course is for the commission to temporarily delay the auction of the Upper 700MHz band until Jan. 14, 2003," Powell said. "While we cannot be sure of the ultimate outcome, the potentially imminent prospect that Congress may wish to change its policy gives me pause."

Until the delay, companies interested in bidding for the band to upgrade their networks were due to put down a deposit no later than today. The 700MHz band was once considered an opportunity for eager carriers to amass more spectrum to start providing so-called third-generation (3G) services, but first the band had to be cleared of existing users, namely small television broadcasters.

The TV stations are required to leave the band as part of a national transition to digital television, but not before 2006 or when 85 percent of households can receive digital TV signals. The FCC directed potential bidders to negotiate with the broadcasters to move them out earlier, but the two camps cannot agree on a price. The largest broadcaster in the band, Paxson Communications Corp., threatened to sue the FCC if it postponed the auction yet again, but it does not plan to seek court action because of the seven-month delay, said Nancy Udell, a Paxson spokeswoman in West Palm Beach, Fla.

"Weve looked at options for seeking court action," Udell said. "But even if we did win, it probably wouldnt change the date of the Jan. 14 schedule."

The largest wireless carrier fought heavily for an indefinite delay, which the commission rejected. However, some smaller carriers, including Leap Wireless International Inc. in San Diego, sought a shorter delay. "The current market conditions probably dont bode well for the auction at this point," Dan Pegg, senior vice president of public affairs at Leap, said late last week just prior to the FCC announcement. "Sixth months would give the capital markets some time to smooth out a bit."

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