RealTime IT News

FCC Figures Change Is Good

The Federal Communications Commission Thursday cashed in on $520 million from the auction of 96 licenses to nine companies.

Averaging just less than $5.5 million a piece, the 700 megahertz guard band licenses are able to be subdivided and leased to third parties as the result of a FCC order that changed the rules governing finite U.S. spectrum.

In a statement about the auction results, FCC Chairman William Kennard said these companies have an exciting opportunity ahead of them to promote the development of secondary markets of spectrum usage.

"Because the licenses were part of the 700 megahertz guard band and the buyers of the licenses must adhere to strict frequency coordination and interference rules, as well as control the use of the spectrum to ensure the public's protection," Kennard said.

The Commission's recent policy shift was made to create a secondary market that treats airwaves like commodities. By creating a new type of licensee dubbed Guard Band Managers, the Commission hopes to fulfill a broader goal based on the theory that private firms will utilize U.S. airwaves more efficiently than the government.

The big winner in the bidding process was a unit of Nextel Communications Inc., which spent $337.8 million on 37 licenses. Nextel , is one of the top firms working feverishly to fill the demand for spectrum used to feed hungry handheld mobile devices.

Pegasus Communications Corp., an independent distributor of DIRECTV, shelled out $91.5 million for 31 licenses. Earlier this year Pegasus Chairman Mark Pagon said funds from a cable-system sale would provide the financial resolve to aggressively market digital-satellite services.

"We're committed to providing satellite-delivered service," Pagon said. "Cable is perceived to be a distraction to that mission. I don't see any changes in our appetite."

A business that focuses on selling spectrum for private wireless communications, the Industrial Telecommunications Association spent $69 million on 29 licenses scattered throughout the nation.

Finally, Motorola Inc. picked up a single license for $6.2 million. Five other bidders claiming small business status won wireless access routes to major economic areas in which the 4 megahertz and 2 megahertz licenses operate.

The spectrum auction began on Sept. 6 ended after 66 rounds of bidding. The licenses were sold for markets including Boston, Charlotte, Tampa, Knoxville, Chicago, Dallas and Seattle. Eight licenses went unsold during the auction and those licenses will be sold in a future auction.

Until this week, the government has licensed each buyer only to further regulate what frequencies and signal power it could use. The rights to U.S. spectrum have never been bought and sold in a secondary market, however this is likely to change very soon.