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FCC turns auction upside down for $300m rural 3G broadband

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A US regulator is proposing a reverse auction to attain national broadband, providing $300m to the company that claims to be able to do the most with the cash pot.

"Auction 901" won't start until September 27, but the FCC has published an interactive map showing which areas of the US are still lacking wireless coverage so potential bidders can start working out how far they could extend their reach for $300m, with the contract going to the company that promises to connect up the most people.

This is a new approach for the FCC. Rural provision of fixed voice has always been achieved from the Universal Service Fund, which pays companies to companies providing ADSL service to remote regions. But that mechanism provides no incentive for cost reduction, and the FCC reckons that achieving "3G or better" mobile coverage is more efficiently achieved with a reverse auction.

Details of how the auction will be run are still up for debate, and the proposal [PDF, long] seeks feedback on various aspects of the auction, but also establishes the date and ultimate aim of Auction 901.

This is only Phase I of the new approach, intended for capital investment in the necessary infrastructure; Phase II will provide $500m in annual running costs.

Bidders will have to show they have enough radio spectrum, and the necessary skills, to run the network. They'll also have to provide roaming agreements and be able to build the whole thing within two years (for 3G - 4G networks get an additional year to deploy).

But the whole $300m probably won't go to one company, though the exact aggregation of blocks is one of the subjects on which the FCC is seeking feedback. The big players will probably take some cash to extend their networks into the larger not-spots but there are some black squares that only cover 10 or 15 people, or a few miles of road, where more innovative technologies might be applicable. ®

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