FCC Spectrum Auction: Highest Bidder Has to Give Much Of It Away

FCC Commissioner Kevin Martin said that highest bidder for the 25 MHz piece of spectrum in the 2155 MHz band would be responsible for building out the network and have to make it available for free to 50 percent of the population within four years. In addition, the top bidder would have to reach 95 percent of the U.S. population within 10 years.

Another FCC provision requires content filtering on the free service to prevent access to adult sites by minors. The FCC is set to meet June 12.

"There has been very little interest in that spectrum and it has been underutilized," according to FCC spokesman Robert Kenny, who said that the spectrum is currently used in point-to-point internal communications in areas such as construction and taxi cab transmissions.

The wireless industry's trade group, The Communications Telecommunications Industry Association (CTIA), has bristled at the suggestion of imposed regulations which would dampen competition in the industry.

"The CTIA supports flexible auction rules that allow any and all entities to participate," said CTIA spokesman Joe Farren in a statement.

The 25 MHz part of the spectrum in the 2155 MHz band is similar to a proposal brought before the FCC in August 2007 by M2Z Networks for free wireless Internet access in the country, which the commission shot down.

The Menlo Park, Calif.-based company's plan called for free, wireless and filtered service at speeds of 512 kbps (384 kbps for downloads and 128 kbps for uploads), which it said was competitive with low-end DSL and about six times faster than conventional dial-up. The company planned to generate advertising revenue from local geo-tagging for search results. Additionally, M2Z said it would also make money by offering a premium (unfiltered) service at speeds of 3 mbps (3,000 kbps), which it said would be competitive with cable modem services and provided through wholesale partners.

The FCC's Kenny said that the commission preferred to, "present this in a way that would attract bidders and ensure competition through auction."

This latest spectrum auction differs from the March 2008, 700MHz spectrum auction in which the winning bidder, Verizon, won the C-block of the 700 MHz band while AT&T won licenses in regional licenses in the C block around the U.S. Verizon spent more than $9 billion, and AT&T over $6 billion in the auction that included an "open-access" provision in which users on roughly one-third of the airwaves would be able to use any phone or software and see other data services expanded.