Verizon Wireless Wins Prized Spectrum

The nation's No. 2 wireless carrier spends freely to capture prime airwaves. 

Verizon Wireless walked off with the top prizes in the FCC's recently concluded 700MHz auction, capturing prime swaths of spectrum for the nation's No. 2 carrier's next-generation wireless broadband service.

The FCC concluded the auction March 18 with winning bids of nearly $20 billion.

Verizon Wireless paid more than $6.5 billion for six large regional licenses that are the equivalent of a national license. In addition, Verizon Wireless won 24 regional licenses located in most of the country's metropolitan areas and another 77 smaller licenses.

Satellite television provider EchoStar was the other big winner in the auction, grabbing enough regional licenses to establish a national footprint while AT&T won 266 small licenses. Google, which pledged before the auction began to meet the minimum $4.6 billion bid for the prime spectrum won by Verizon Wireless, ultimately won no licenses in the auction.

"We were successful in achieving the spectrum depth we need to continue to grow our business and data revenues," Verizon Wireless said in a statement.

Verizon Wireless' new prime airwaves are considered particularly well-suited for broadband because the signal properties can travel great distances and penetrate mountains, buildings and walls. The FCC placed conditions on the sale of the spectrum, requiring the winning bidder to build an open network to which users can connect any legal device and run the software of their choice.

Consumer groups viewed the final results of the auction as a mixed bag.

"The auction returned nearly double the expected revenue to the [U.S.] Treasury," Ben Scott, policy director of Free Press, said in a statement. "In a positive first step toward wireless innovation, conditions on the C block licenses will require any handset and any software application to work on the new network."

Scott, though, said the auction was disappointing because a competitor to traditional telecommunications companies did not materialize.

"The auction ... failed to produce a much-needed competitor to the phone and cable giants," Scott said. "Since Verizon-winner of the C block-is already a dominant provider of DSL, the prospect of a genuine third-pipe competitor in the wireless world is now slim to none."

Gigi B. Sohn, president and founder of Public Knowledge, echoed Scott's comments: "It is disappointing that new competitors and innovators won't have access to the spectrum to give consumers the benefits of real broadband competition."

Both Scott and Sohn also expressed disappointment over the failure of a winning bid for spectrum earmarked for an interoperable public safety network to be operated by a public-private partnership.

"The failure of the D block to meet its reserve price raises significant questions about how the FCC will meet the needs of public safety," Scott said. Sohn added, "We hope the commission will take the time to take a wide-ranging view of how the spectrum could be used and on what terms and conditions. Perhaps the D block could be made available to innovators on a wholesale basis as the C block was not."

The spectrum auction is part of the transition to digital television that will culminate in all television signals switching from analog to digital on Feb. 17, 2009.