FCC chief would cut minimum bid on D block airwaves

WASHINGTON (Reuters) - The top U.S. communications regulator will propose halving the minimum opening bid on a piece of potentially valuable wireless spectrum, after an earlier auction failed to attract industry interest.

The Federal Communications Commission will likely vote Thursday on a plan devised by agency chairman Kevin Martin, cutting to $750 million a prior $1.3 billion minimum bid, and easing other requirements.

The aim is to lure interest in the airwaves, which come with a requirement to partner with public safety agencies during emergencies.

Investors were unwilling to meet the government's minimum price for the so-called D block spectrum, considered valuable because its signals go long distances and penetrate thick walls.

The 700-megahertz airwaves are being returned by television broadcasters as they move to digital from analog signals in early 2009.

"There is some sense (among industry) that this public, private, commercial partnership may be too difficult to work as a matter of economics," said Paul Glenchur, an analyst at the Stanford Group in Washington.

Under a new proposal described by Martin earlier this month, the minimum bid will be cut to $750 million and the geographic areas could be split up into 58 regions. Additionally, the coverage requirements have been eased.

The government auctioned off nearly $20 billion worth of 700 MHz spectrum earlier this year, with AT&T Inc (T.N) and Verizon Communications (VZ.N) the biggest winners.

But a slice known as the D block spectrum - which comes with requirements to enter a partnership with police, firefighters and other public safety groups - failed.

The lone bid on that block was a fraction of the FCC's minimum price.

Both AT&T and Verizon back a request-for-proposal process to divvy up this part of the spectrum on a regional basis, rather than auctioning it off as one large block.

Consumer groups, including the Media Access Project, question whether AT&T and Verizon should be eligible given the large chunk of the spectrum they acquired in the earlier 700 MHz auction.

"AT&T and Verizon have such an enormous advantage in terms of their spectrum holdings, that allowing them to capture this would really be bad for consumer protection," Media Access Project senior vice president Harold Feld said.

(Editing by Tim Dobbyn)