FCC chief says economy could hurt wireless sale

By Peter Kaplan

WASHINGTON (Reuters) - The head of the Federal Communications Commission expressed concern on Tuesday that the credit crunch could hinder bidders in an upcoming government auction of wireless airwaves.

FCC Chairman Kevin Martin said during a news briefing that he was "concerned that the overall economic conditions could end up impacting the auction."

"Is it an ideal time to necessarily be conducting an auction? I'm not so sure," Martin said.

Martin's comments came less than a week after a key potential bidder called Frontline Wireless dropped out of the wireless spectrum auction.

The auction is scheduled to begin on January 24 and has been expected to raise at least $10 billion for the U.S. government from airwaves being returned by television broadcasters as they move to digital from analog signals in early 2009.

The auction comes at a time when a meltdown in the U.S. housing and subprime mortgage markets has severely pinched the ability of companies to raise capital.

Martin said the auction must go forward since Congress has ordered the FCC to begin the auction by January 28. "We're required by law to conduct the auction at this time, so we'll go forward with it no matter what."

Potential bidders in the auction include U.S. wireless providers AT&T Inc (T.N: Quote, Profile, Research, Stock Buzz) and Verizon Wireless, a joint venture of Verizon Communications Inc (VZ.N: Quote, Profile, Research, Stock Buzz) and Vodafone Group Plc (VOD.L: Quote, Profile, Research, Stock Buzz), as well as Internet company Google Inc (GOOG.O: Quote, Profile, Research, Stock Buzz), ventures involving EchoStar Communications Corp (DISH.O: Quote, Profile, Research, Stock Buzz), Cablevision Systems Corp (CVC.N: Quote, Profile, Research, Stock Buzz), Qualcomm Inc (QCOM.O: Quote, Profile, Research, Stock Buzz) and Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) co-founder Paul Allen.