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FCC Chairman: D-block auction must go on
As the 700 MHz auction draws ever nearer, speculation surrounding the fate of the D-block of spectrum, which the now defunct Frontline Wireless was expected to win, has reached a fever pitch. FCC chairman Kevin Martin gave some guidance on the auction during a press conference about the XM-Sirius acquisition.
Because of auction rules that keep potential bidders from discussing their strategy, Frontline cannot disclose why it went out of business. But many assume that the soft market is responsible for its inability to raise sufficient funds to bid on the spectrum.
"Is this ideal time to be conducting an auction? I'm not so sure," Martin said, "but Congress has required us to go forward with that auction." Martin also looked to deflect criticism that the FCC tailored rules for the D-Block to Frontline Wireless, which could make it a difficult slice of spectrum to auction now. "None of the rules we adopted for the spectrum was put into place to facilitate entry by any company," Martin said.
Martin would not explain what the FCC would do should the D-Block not fetch its required price point: "It's premature to speculate what the commission might end up doing," Mr. Martin said. "We're still focused on this auction and still optimistic that someone will be willing to take on that burden to serve public safety."
For more on Martin's defense of the auction:
- read this report from the WSJ (sub. req.)
Related articles:
Full coverage of the 700 MHz auction is here
Comments (1) | Post a comment
Comments
Posted by Allen | January 17, 2008 - 11:51am
If the auction for the D-Block was fully dependent all along on one player (Frontline) then why put-up the illusion of an auction? An auction has to have the participation of more than one bidder, or else, why have an auction in the first place?
Second, the FCC has always anticipated the possibility that the C-Block or the D-Block may not get any bidders. If this occurs, the FCC has said that it will have a second auction with some restrictions lifted. This method allows the FCC to test out new options, like the public service sharing arrangement for the D-Block, realizing that if it doesn't work, it doesn't work. You can't tell until you try it.
Having said that, there is still the possibility that a large operator participating in the auction may way to grab the D-Block. It is relatively inexpensive.
And finally, comments were made in the article about this perhaps not being the best time for an auction. I really disagree. The problem with past auctions has been that purchases were made, then economic conditions changed forcing those that purchased the spectrum to go bankrupt or otherwise not use it. Maybe this time bidders will be much more conservative. Yes, the Government loses it because it doesn't receive loads of money, but the public wins because the business models are much more realistic. If the FCC was really intent on helping the public good, it would lower the reserve prices and let the market determine that, instead of using the auction for a nice source of "free" money.
