Spectrum Auction: Delay No. 6?

Carriers confused over value, ownership; users left with few 3G choices.

Wireless service providers interested in amassing more bandwidth are preparing deposits for the Federal Communications Commissions spectrum auction scheduled for June. But potential bidders arent holding their breath, as theres a strong chance the auction, already postponed five times, will be delayed once again.

Though the FCC has set a deadline of June 19 for the auction, carriers remain conflicted, caught between their desire for more airwaves and confusion over the value and ownership of the disputed spectrum. Thus far, government administration of the spectrum has done little to address either issue, according to insiders.

Meanwhile, the muddled spectrum picture leaves U.S. wireless users with far fewer choices than those in Europe and Asia when it comes to advanced data services, often called third-generation wireless, or 3G.

Several years ago, the wireless industry persuaded the FCC to reallocate the frequencies located in the 700MHz band from television broadcasting to mobile services, touting the band as prime 3G real estate. Now the same carriers are asking for the auction to be delayed.

Symbolic of the hurry-up-and-wait approach of many carriers, an official at Cingular Wireless Inc. said that a spectrum shortage is keeping service providers from rolling out new mobile services for businesses but that bidding for the 700MHz band would not necessarily accelerate deployment. "We need the spectrum, but if you participate in this auction, when are you actually going to get it?" said the official, who asked not to be named. Cingular has not said if it plans to bid.

Contributing to the problem in the 700MHz band is the standoff between potential bidders and current users of the spectrum—mostly small television stations. The broadcasters must 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.

"What youve got is a failed digital television policy and a failed 3G policy simultaneously, and one affects the other," said Rep. Edward Markey, D-Mass., testifying last week at a Senate commerce committee hearing.

Lawmakers are divided on whether to leave the 700MHz auction schedule up to the FCC or to weigh in directly. The House of Representatives this month passed a bill that would delay the auction indefinitely, but the Senate is considering conflicting bills: One would endorse the House approach, while the other would force the FCC to stick to the June 19 schedule.

"I think the burden of proof [for further delay] is on [FCC] Chairman [Michael] Powell," said Sen. John McCain, R-Ariz., at last weeks hearing. "I dont know what the right thing to do is."

For manufacturers of handheld computing devices, the carriers problem becomes their own, and they have joined the wireless industry in pressing the FCC for a delay.