Bloomberg News

FCC Said to Propose Market-Maker Role in Airwaves Auction

September 07, 2012

A U.S. agency today will propose acting as the sole buyer for airwaves that television stations will surrender for an auction of spectrum to mobile providers led by Verizon Wireless, two officials said.

The idea is among several being advanced by Federal Communications Commission Chairman Julius Genachowski for the auction planned for 2014, said the agency officials, who spoke yesterday on condition of not being identified because the matter hasn’t been made public.

The auction is being set up to provide more spectrum for Verizon, AT&T Inc. (T:US) and other wireless-service providers that are facing soaring demand for data to feed tablet computers and smartphones such as Apple Inc.’s iPhone. President Barack Obama’s administration has made freeing more airwaves a priority, saying U.S. competitiveness depends in part on fast and widespread mobile-Internet service.

“Incentive auctions will drive faster speeds, greater capacity, and ubiquitous mobile coverage,” Genachowski said in an e-mailed statement yesterday. “These are essential ingredients for innovation and leadership in the 21st-century economy.”

The FCC plans to buy airwaves that some TV stations will voluntarily relinquish in a process known as a reverse auction. It would then sell the frequencies in a traditional auction. The FCC will seek public comment before it settles next year on rules for the auction, the officials said.

Stations’ Choices

TV stations will have to decide whether to keep their airwaves and stay in business, sell part of their allotments, or sell all their airwaves and take a one-time payoff to cease broadcasting.

As stations make their choices, the FCC will need to reassign some to new frequencies to assemble blocks of clear airwaves that would be attractive to mobile providers.

Genachowski’s proposal will ask for input on how to best approach all three phases: the initial airwaves purchase, the reassignment of stations in markets around the country, and the auction to wireless providers.

The FCC will propose two pricing models for buying airwaves from stations: accepting the lowest sealed bids, or offering progressively lower prices to winnow the field of sellers.

It will seek comments on whether other pricing models may work, the officials said.

Verizon, AT&T

Procuring airwaves has become a priority for Verizon, which last month won regulatory approval to buy frequencies from cable companies, and for second-largest provider AT&T, which was rebuffed by U.S. officials last year when it tried to buy No. 4 U.S. provider T-Mobile USA Inc.

Genachowski will ask fellow commissioners to formally request public comment on the auction plans during the agency’s Sept. 28 meeting in Washington, the officials said. The chairman also will propose altering how the agency judges whether prospective airwaves purchases by wireless providers raise anti- competitive concerns.

“The economic impact of bringing additional spectrum to market will be tremendous,” Steve Largent, president of CTIA- The Wireless Association, said in an e-mailed statement. “The FCC is taking a vital step that will foster continued growth in the U.S.”

Members of the Washington-based wireless association include Verizon, AT&T, third-largest provider Sprint Nextel Corp. (S:US) and T-Mobile.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net;

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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    (AT&T Inc)
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  • S
    (Sprint Corp)
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