FCC to unveil auction plan on Wednesday

WASHINGTON Wed Apr 25, 2007 9:09am EDT

Kevin Martin, Federal Communications Commission chairman, listens to a question during an Industry Insider session at the 2007 International CES in Las Vegas, January 10, 2007. The Federal Communications Commission will take its first stab on Wednesday at defining how a 2007 auction of airwave spectrum will take place. REUTERS/Steve Marcus

Kevin Martin, Federal Communications Commission chairman, listens to a question during an Industry Insider session at the 2007 International CES in Las Vegas, January 10, 2007. The Federal Communications Commission will take its first stab on Wednesday at defining how a 2007 auction of airwave spectrum will take place.

Credit: Reuters/Steve Marcus

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WASHINGTON (Reuters) - The Federal Communications Commission will take its first stab on Wednesday at defining how a 2007 auction of airwave spectrum will take place.

The agency plans to auction airwaves later this year that are being returned by television broadcasters as they move to digital signals early in 2009.

The sale is touted as the last opportunity for new players to enter the wireless market and is expected to raise billions of dollars.

But first the FCC has to define how the auction will work, provide a set of rules on how the spectrum will be divided and say what kind of services can be offered using the airwaves.

The FCC is expected to outline a tentative plan at an open meeting of its commissioners on Wednesday -- a crucial step that will help potential bidders craft their strategy.

"They will put out a tentative plan," said Paul Glenchur, an analyst with Stanford Group Company in Washington. "A few more weeks will pass, and I think they will lock it down, but I don't think they are quite there yet."

Waiting in the wings are a number of companies and groups keen to grab some of the airwaves in the 700 megahertz band. That part of the spectrum is prized because the airwaves can travel long distances and penetrate thick walls.

"The 700 Mhz is the largest block of the most desirable spectrum to be made available in this generation. The future of broadband service in this country will be determined by the outcome of this auction," said Andrew Jay Schwartzman, president of Media Access Project.

WISH LISTS

Media Access and other consumer advocacy groups such as Consumers Union are pushing for rules they say would increase competition.

The groups want half the airwaves up for auction to be designated as "open access" spectrum. That would allow other companies to buy access on established wireless networks so they can offer their own wireless services.

The consumer groups also want rules to ensure that broadband providers treat all Internet content in the same way.

Meanwhile, a start-up firm called Frontline wants the block of spectrum that is next to a block set aside for emergency workers to be designated for both public safety and commercial use.

The FCC is expected to put parts of Frontline's proposal out for public comment, which means that the agency has not ruled it out. But it also means that the final auction rules are not yet set in stone.

"The significance of what is happening tomorrow is that they are creating another step that has to be gotten through before they can start really preparing for the auction," said Rebecca Arbogast, an analyst with Stifel Nicolaus.

"It is prolonging this period of uncertainty about what the licenses are really going to look like that people are going to be bidding for."

A delay is difficult for smaller companies and potential new entrants, which need to know what the license structure is because it is harder for them to line up financing, she said.

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