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AT&T and Verizon thrash rivals with $16bn spectrum swipe

FCC Chair pleased with lack of diversity

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AT&T and Verizon Wireless barreled through the auction of some prized US airways, shelling out $16bn to keep data humming across their cross-country networks.

The Federal Communications Commission (FCC) announced the big winners on Thursday and re-confirmed that a total of $19.6bn went toward the 700MHz spectrum auction. The AP burrowed through the auction results and found that AT&T bid $6.6bn, while Verizon bid $9.4bn. So, you can consider the status quo well intact.

Much was written leading up to the auction about Google's vow to bid for spectrum. While the ad giant did make some offers, it failed to win any portion of the wireless goods.

Verizon Communications - a union of Verizon and Vodafone - grabbed the majority of the consumer-oriented C block and will have to adhere to an "open access" provision that should let consumers link whatever devices or software they want to a section of the network. With the C block in hand, Verizon Communications could roll out a new high-speed data network, stretching across the US. (Google did help push for the open access bit.)

AT&T took more than 200 licenses across the B block regional licenses, while Frontier Wireless nabbed space in the E block, providing near nationwide coverage. Qualcomm also shelled out close to $1bn for large chunks of access to the B and E block licenses.

While AT&T and Verizon dominated the auction, FCC Chairman Kevin Martin seemed to think that enough licenses were spread around to create "opportunities for new entrants and small businesses both nationwide and in rural markets."

"A bidder other than a nationwide incumbent won a license in every market," Martin said. "As a result of the 700 MHz Auction, there is the potential for an additional wireless ‘third-pipe' in every market across the nation.

"Additionally, 99 bidders, other than the nationwide wireless incumbents, won 754 licenses – representing approximately 69 percent of the 1090 licenses sold in the 700 MHz auction. The Auction therefore drew wide-ranging interest from a number of new players. For example, Frontier Wireless LLC (EchoStar), which is widely viewed as a new entrant, won 168 licenses in the E block to establish a near nationwide footprint for its services for consumers."

FCC Commissioner Jonathan Adelstein, however, was quite upset that minority-owned business didn't take a bigger share of the wireless pie.

"It’s appalling that women and minorities were virtually shut out of this monumental auction," he said. It’s an outrage that we’ve failed to counter the legacy of discrimination that has kept women and minorities from owning their fair share of the spectrum. Here we had an enormous opportunity to open the airwaves to a new generation that reflects the diversity of America, and instead we just made a bad situation even worse. This gives whole new meaning to 'white spaces' in the spectrum."

An interesting argument. No, not really.

No group managed to bid high enough for the D block, which was meant to go toward public safety projects. The FCC wants $1.3bn for this chunk of spectrum.

Frontline Wireless, a company funded by Silicon Valley types and championed by former FCC Chairman Reed Hundt, had hoped to take the D block but shut down before the bidding war really got going.

The winning bidders must now prove to the FCC that they've got the cash via some down payments. ®

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