dailywireless.org » Verizon Gets the “C” Block

Verizon Gets the “C” Block

Verizon Wireless, bidding $9.4 billion, has been awarded the lion’s share of the 22 MHz “C” block in the government’s 700 MHz auction, the U.S. Federal Communications Communication said today. Here’s their full list of 700 MHz winners (pdf). The “C Block”, which encompasses about a third of the spectrum at auction, is subject to “open access” provisions, allowing users of the network to use whatever phones or software they wish.

AT&T and Verizon Wireless, the nation’s two biggest cell phone carriers, bid a combined $16 billion of the record $19.6 billion pledged in the auction with Verizon bidding $9.4 billion and AT&T bidding $6.6 billion. AT&T won 227 licenses from the “B” block of regional licenses. Of course, AT&T last year purchased the “C” block from Aloha Partners — for some $2.5 billion in cash.

Frontier Wireless LLC, which is owned by satellite tv provider EchoStar, won nearly enough licenses to create a nationwide footprint while Qualcomm won swaths of the “B block” (6 MHz x 2) and E Blocks (6 MHz x 1) - probably for its proprietary MediaFLO mobile television system.

In a statement, Verizon Wireless said:

“We are very pleased with our auction results… The bids we won include a nationwide spectrum footprint covering 298M Pops, plus 102 licenses for individual markets covering 171M Pops.”

According to the Wall Street Journal:

Verizon won six large licenses that effectively will give it a national license to provide next-generation wireless broadband service. It was also the largest winner of licenses in the A-block, which are medium-sized licenses, and won 77 more in the B-Block, the smallest licenses that were being auctioned off.
Google, another potential newcomer, didn’t win any licenses, FCC Chairman Kevin Martin said at a press conference at the agency’s headquarters.
AT&T won 227 of the smallest licenses being sold, but didn’t pick up any in the larger blocks being auctioned off.

Here are the results. Other big spenders:

Century Tel: $149 million
Cox: $304.6 million
Frontier Wireless aka EchoStar (DISH): $711.8 million. Frontier spent all of its cash on the E block, which was expected to be used for a mobile television service.
Qualcomm: $558.1 million. The company also had the high bid on the D block at $472 million; but that failed to meet the reserve price, and that block will be re-bid.
King Street Wireless, an affiliate of U.S. Cellular: $300.5 million
Vulcan Spectrum (owned by Paul Allen): $112.8 million. Vulcan paid $43.6 million for “A Block” spectrum in the Portland-Salem areas and $69.1 million for spectrum in the Seattle-Tacoma-Bremerton areas.

In my state of Oregon, for example:

A-Block licenses (12-megahertz) were won by Vulcan Spectrum, which paid $43.6 million for spectrum in the Portland-Salem areas and $69.1 million for spectrum in the Seattle-Tacoma-Bremerton areas, as well as US Cellular (Southern Oregon).
B-Block licenses (12-megahertz) were won by AT&T (metro and coast), CenturyTel (mid-state) and US Cellular (eastern Oregon).
C-Block licenses (22-megahertz) were won by Verizon with state-wide coverage.
E-Block licenses (6-megahertz) were won by Frontier (Echostar) for statewide coverage.

Google says they’ll have more to say about the auction in the near future.

The complete auction results files, including bidder identities, are now available. These files can be accessed in the FCC Auction System at http://auctions.fcc.gov. Later today, files will also be available on the Auction 73 web page at http://wireless.fcc.gov/auctions/73/.

That was a short 10 days.

According to Reuters, Verizon Wireless made a top offer of $4.74 billion for the C block spectrum, giving it control of a major piece of the airwaves being vacated by television broadcasters as they move to digital from analog signals in early 2009.

But the $4.71 billion offer in early February, which triggered the “open access” provisions for the band was surpassed by a combination of separate bids for regional pieces of the C-block airwaves.

The FCC’s auction 73 included 1,099 licenses in the 700 MHz Band. A total of 62 MHz was auctioned with 6-22 MHz per license. RCR News and Blog Runner have complete coverage.

Building out that service could cost another $10B. But AT&T and Verizon already own cellular towers across the country, with many designed for 800 MHz service. Phone companies that provide rural phone service are also eligible for government-backed rural subsidizes.

In addition, Verizon is a subcontractor in the giant $10B dollar federal IWN project to install thousands of 700 MHz towers in every community in the United States. That might — in effect — act as a cross-subsidy. The communications network would use Project 25, 2-way radios, and be used only by federal law enforcement agencies (not local first responders). But the Integrated Wireless Network (Washington Post story) — was severely criticized by the Inspector General. Some critics believe IWN will never be completed because of the $5-$30B taxpayer cost (estimates vary).

Meanwhile, a coalition of consumer and public-interest groups asked the Federal Communications Commission to probe the failure of the national commercial-public safety D-Block license, to attract a winning bidder, reports RCR Wireless News.

“In particular, Public Interest Spectrum Coalition asks the commission to investigate carefully the allegations surrounding a purported meeting between Frontline Wireless, its financial backers, and Morgan O’Brien of Cyren Call [Communications Corp.] that may have had the effect of preventing Frontline from attracting needed capital and discouraging other bidders,” stated the letter to FCC Chairman Kevin Martin.

700 MHz Spectrum Winners (2008)
Source: Telephony

	Bidder	Total bids	Spectrum acquired
#1	Verizon Wireless	$9.36B	C Block open access covering lower 48/key metro and economic areas
#2	AT&T	$6.64B	B Block metro licenses in large cities across the U.S.
#3	EchoStar/DISH Network	$711M	168 E block (unpaired) licenses across the U.S.
#4	Qualcomm	$588M	E Block licenses in Boston, Los Angeles and New York City; placed sole bid on D Block public safety license (but didn’t win)
#5	MetroPCS	$313M	Single A Block license in Boston
#6	Cox Communications	$304M	14 A block, 8 B block
#7	US Cellular	$300M	25 A block, 127 B block
#8	Cellular South	$191M	14 A block, 10 B block
#9	CenturyTel	$150M	A and B Block licenses in its LEC territory
#10	Vulcan Spectrum	$112.8	$43.6 million for A Block” in Portland, Salem and $69 million for Seattle, Tacoma, Bremerton