Martin: D-Block, AWS-3 Auctions May Wait Until Next Year
FCC Chairman Kevin Martin said it appears increasingly doubtful that either the D-Block re-auction or advanced wireless services-3 bidding will happen this year, which means competition for the two valuable blocks of public airwaves likely will play out under a new administration and Congress, according to RCR Wireless News.  “I think it’s very difficult to [start either auction in 2008] because in both cases the commission sought … additional comments,” Martin said.  Details.

FCC Schedules 700 MHz D Block NPRM For May 14 Meeting
The FCC will hold an Open Meeting on May 14 to consider new rules for auction of the 700 MHz D Block spectrum.  As reported by TR Daily, the item is open-ended with no tentative conclusions and seeks views on a wide variety of issues, including whether the Commission should re-auction the spectrum solely for commercial purposes, according to FCC Chairman Kevin Martin.  The spectrum failed to meet the $1.33 billion reserve price at the first 700 MHz band auction.  Also on the FCC agenda is a fourth memorandum opinion and order addressing a petition for reconsideration and a request for clarification of a third report and order on public safety narrow-banding.  Details.

Google Petitions FCC To Condition Verizon C Block 700 MHz License
Google filed a petition with the FCC last week urging the Commission to condition its grant of Verizon Wireless’s C Block 700 MHz licenses in a manner that would preclude Verizon Wireless from restricting customers who secure devices from Verizon Wireless from accessing certain applications.  But Verizon Wireless shrugged off the filing, according to RCR Wireless News.  “This looks like sour grapes,” said Jeffrey Nelson, a Verizon Wireless spokesman.  “We knew the rules of the auction before bidding and winning spectrum, and of course we’re going to abide by those rules.”  Details.

MVNO Links Made, Disputed In D-Block
Public Safety Spectrum Trust Chairman Harlin McEwen has distanced himself from a key element in an FCC inspector general report on the unsettled 700 MHz D Block, reported RCR Wireless News.  It continued: The report, which cleared Cyren Call Communications of any wrongdoing prior to the failed auction of the D Block, described now-defunct Frontline Wireless’s concerns about Cyren Call’s plan to become a mobile virtual network operator that would resell service to first responders across the country.  McEwen said he wasn’t present at a meeting last fall in which Cyren Call Chairman Morgan O’Brien, according to information given to the FCC IG, told then-Frontline Wireless vice chairman Reed Hundt that Cyren Call wanted to create an MVNO that would buy spectrum wholesale from the D-Block winner and resell it at a higher price to public-safety agencies.  When asked about Hundt’s recounting of the meeting with O’Brien in the FCC report, McEwen said, “That does not jibe with anything I’ve discussed with Cyren Call…[Cyren Call] never discussed anything like that with us, and we would never have approved anything like this.”  Details.  Meanhile, O’Brien took Cyren Call’s message to the people speaking at the Rural Cellular Association’s convention.  And that message is: rural carriers should team up to bid on the D Block during its re-auction that O’Brien thinks could happen as soon as October.  Details.

700 MHz Panelists React To Auction
In a featured panel at WCA 2008 last week, a prominent regional carrier predicted partner deals between smaller 700 MHz auction winners and the two largest winners, AT&T and Verizon Wireless.  Patrick Riordan, president and chief executive officer of Nsight Teleservices in Wisconsin and president of the Rural Cellular Association, said the partnering options might be in areas where the two largest winners don’t want to build out.  According to coverage in TR Daily by Senior Editor Paul Kirby, Riordan said that his company won two licenses in the auction, which is better than he said it expected to do.  But overall, he complained about the price of the spectrum, saying, “The cost of the licenses certainly favored the bigger players.”  He also suggested there is “some backlash” that could lead policymakers to consider reinstituting a spectrum cap in light of the fact that Verizon Wireless and AT&T walked away with more than 80% of the spectrum on a per/MHz/”pop” basis. TR Daily also reported him as saying that it is crucial for smaller players to be able to sign data roaming contracts with bigger providers.  Broadband data is currently excluded from the FCC’s automatic roaming mandate.  “If, in fact, we’re shut out from data roaming, we should be putting our company up for sale,” he said.  “That’s a life and death issue for us.” In additional coverage of the panel, TR Daily quoted Henry Hultquist, vice president for federal regulatory for AT&T, as saying that his company opposes any spectrum caps and said any analysis of how much spectrum a company has should include all bands, including the 2.5 gigahertz band and advanced wireless services (AWS) spectrum.  He also cited statistics often noted by FCC Chairman Kevin J. Martin to make the point that smaller entities fared well in the 700 MHz band sale.  He said AT&T planned to build out the fourth-generation spectrum it won in the sale by 2011.

Frontline Leader Hunt Says $50 Million Lease Fee Request Chilled 700 MHz Investors
Reed Hundt, the former FCC Chairman and vice chairman of now-defunct Frontline Wireless LLC, says that a proposed annual $50 million spectrum lease fee for use of public safety spectrum and other factors spooked the company’s investors before the 700 megahertz band sale.  “The total amount of extra cost . . . that public safety wanted was both huge and ambiguous,” Hundt said in an interview with Paul Kirby of TR Daily.  “A part of it was . . . saying we want 50 million bucks of cash every year, but there were many other things, too. . . . There’s only so much, you know, juice in the orange.” Also, he suggested that FCC take the rest of the year to review its rules, and then give potential bidders time to raise financing.  But FCC Chairman Kevin Martin said he wants the reauction to start by October. 

PSST & Cyren Call Defend Their Relationship In 700 MHz Band
The chairmen of the Public Safety Spectrum Trust (PSST) and its adviser, Cyren Call Communications Corp., reiterated their defense of their relationship at the WCA 2008 convention last week -- and stressed the need to actively cultivate potential bidders for a reauction of the 700 megahertz band D block.  PSST Chairman Harlin McEwen and Cyren Call Chairman Morgan O’Brien said the PSST is the decision-maker in the relationship.  “They work for us,” McEwen said.  “I can guarantee you,” he added of O’Brien, “I’m the dog and he’s the tail.”  But McEwen also said that if the FCC bans Cyren Call from being its adviser, the PSST will need to find someone else.  “We don’t have the expertise that Cyren brings to us....We don’t have the business acumen,” he said.  The two organizations were criticized by House Energy and Commerce Committee Chairman John Dingell (D-MI) for their relationship, including a $4 million loan Cyren Call made to the PSST last October. 

700 MHz Auction Prompts U.S. Regulatory Follow-ups
With many questions looming over the FCC’s recent auction of 700 MHz spectrum, the FCC is expected at its meeting on March 14 to invite public comment on rules for re-auctioning the “D Block” intended for public safety applications.  FCC Chairman Kevin Martin said the Commission will invite rule changes to encourage bidders for the spectrum, which failed to attract a bidder earlier this year willing to commit to the $1.3 billion reserve price to be paid to the U.S. government for rights to build a nationwide public safety network under an innovative plan for a public/private partnership.  He commented, “This is a very open-ended notice that doesn’t have any tentative conclusions about what we should or should not do.”  Please see news items below for other comments on the auction, which raised $19.6 billion for spectrum rights and was the subject of several sessions at last week’s WCA 2008 convention in Washington, DC. 

C Block Hits Reserve In 700 MHz Auction; Open Access Becomes Reality
Following a few tense rounds without any bids, the nationwide block of eight C-Block licenses collectively covering 50 states picked up a new bid during round 17 to push the potential winning price for the block past the $4.6 billion reserve mark, thereby triggering the spectrum’s open-access provision, reported RCR Wireless News.  It continued: The potential winning bid for the block sat at $4.7 billion after round 21, with the minimum bid for round 22 set at $5.2 billion.  But another closely watched block of licenses – D-Block – continued to draw no new bids, standing at $472 million, far short of its $1.3 billion reserve price.  This 10-MHz nationwide license is to be combined with public safety spectrum in a nationwide broadband network.  FCC continued to hold at a minimum bid of $519 million for the next round.  If any of the spectrum blocks do not meet their reserve prices, they will be re-auctioned.  The blocks that have met the reserve prices include the A-Block and the B-Block.  “This means that 24 MHz of the total spectrum is no longer subject to a potential re-auction,” Stifel, Nicolaus & Co said in a research note.  Overall, the FCC’s 700 MHz auction has reached $15.6 billion in total potential winning bids.  Details.

Public Safety Community Concerned About Bidding For D-Block License In 700 MHz Auction
The anemic bidding for the D-Block license in the FCC’s 700 MHz band auction is concerning the public safety community, although some say they are still optimistic that an entity will come forward to meet the $1.33 billion reserve price so the spectrum doesn’t have to be re-auctioned, reported TR Daily.  It continued: Bidding for the D-block license remained stalled today, with a $472 million bid received in the first round last Thursday remaining the only offer.  “So far, I’ve been kind of disappointed,” said Don West, communications director in the Emergency Response Division of the Indiana Department of Homeland Security and an attendee at the Association of Public-Safety Communications Officials-International’s annual summit in Orlando, FL.  “I was really hoping that there would be a lot of competition for that block.”  The FCC has not decided whether to impose the same conditions on the D-block license if it is forced to re-auction the spectrum.  Analysts seem increasingly pessimistic that the D block won’t have to be re-auctioned.  “We continue to see the most likely outcome as the FCC holding a subsequent auction with a lower reserve price and milder conditions, although this depends on the assessment of the chairman and other commissions about the broader reaction to this, as well as the likelihood that there would be a winning bidder the second time around,” Stifel, Nicolaus said.  Meanwhile, the FCC remains hopeful that competition for the D-Block license will heat up and the reserve price will be met, Derek Poarch, chief of the Public Safety and Homeland Security Bureau, told TR Daily.  “It’s very early on in terms of the bidding that’s ongoing,” he said.

FCC Approves AT&T’s Purchase Of 700 MHz Spectrum From Aloha
The FCC has adopted an order approving AT&T’s $2.5 billion acquisition of lower band 700 MHz spectrum from Aloha Partners, according to TR Daily. The vote was 4-1, with Commissioner Michael Copps dissenting and Commissioner Jonathan Adelstein concurring. Copps said he was concerned that the order raised from 70 MHz to 95 MHz per market the “initial spectrum screen” used to flag merger reviews for more detailed analysis.

Arcadian Networks To Open Its 700 MHz Frequencies To First Responders
Arcadian Networks said it will make the 700 MHz spectrum it owns available to first responders through the “private, secure, wireless network” it’s already offering to utilities, according to Communications Daily, which further reported:  Backed by Goldman Sachs, Arcadian said it wants to address the problem highlighted by Frontline Wireless, which shut down its operations prior to the 700 MHz auction.  “Frontline was a key player in driving public awareness and the FCC to the pressing need of a private and secure network for critical infrastructure industries and public safety,” said Arcadian CEO Gil Perez.  “Unfortunately, Frontline was unable to execute on its vision.  Arcadian Networks is taking a different route to the same destination.”  Arcadian owns 700 MHz spectrum covering over 75% of the continental U.S. and Gulf of Mexico.

700 MHz Auction Starts Jan. 24, Rings Up $2.4B In First-Round Bids
The auction of 700 MHz frequencies began Jan. 24, attracting 1,849 bids totaling more than $2.4 billion during the first round, according to RCR Wireless News, which further reported: The FCC is keeping the identities of bidders secret during the auction to guard against anti-competitive behavior.  Names of all bidding winners will be disclosed after the auction closes, perhaps a month or so from now.  The national commercial-public safety D-Block license received a $472 million bid.  The minimum bid for the second round is nearly $543 million, far below the $3.1 billion reserve price set by the FCC for the D Block.  A collection of eight regional licenses in the C Block covering the 50 states garnered the highest bids during the first round, totaling just over $1 billion.  C Block must draw the minimum $4.6 billion reserve price to keep the open-access license intact.  Other high bids during the first round included an $83 million bid for a 12 MHz A Block economic area license covering the New York City area; a $59 million bid for a 12 MHz B Block cellular market license covering New York City; and a $41 million bid for a 6 MHz, unpaired E Block EA license also covering the New York City area.  Details.

Verizon, AT&T Seen As Active Bidders In FCC’s 700 MHz Auction
Verizon Wireless and AT&T are expected to be particularly active bidders in the FCC’s 700 MHz spectrum auction, which began today, TR Daily reported, quoting analysts.  A big question is whether one – or both – of the incumbents will go after the 10-MHz D-block license in the wake of the demise of Frontline Wireless.  Another issue in the sale is whether the current economic slowdown – and possible related failure of auction bidders to line up financing – will result in one or more of the spectrum blocks failing to meet the FCC’s reserve price, forcing the agency to reauction the frequencies without the same strict open access or other conditions now placed on them, analysts say.  In a budget and economic outlook for fiscal years 2008-2018 released Wednesday, the Congressional Budget Office forecasted the 700 MHz band auction to bring in $11 billion this year; it also projected other auction receipts of $2.9 billion between 2009-2012.  As to which entities are likely to go after which spectrum, Stifel, Nicolaus said it believes Google is likely to bid the $4.6 billion reserve price for the 22-MHz C block in order to trigger the open access conditions.  It said Verizon Wireless was the most likely company to end up with the C block.  But, it said Google could end up winning one of the six regional licenses with Verizon Wireless or AT&T getting the rest.  Although Stifel, Nicolaus said Verizon Wireless would likely be satisfied with the C block, it may bid on the D block to drive up the price for AT&T “and perhaps will want to bid to obtain both the C and the D [blocks] anyway.”  AT&T also could be interested in A- and B-block spectrum, it said.