Friday, January 25, 2008

700 MHz auction - away we go

The long-awaited (and I mean long-awaited) 700MHz spectrum auction kicked off yesterday with the first two rounds of bidding. To maintain bidder confidentiality and try to prevent gaming the system, individual bidder names are not released--results only reflect the total amount bid in each individual auction.

The bottom line: a lot was bid yesterday, but nowhere near the FCC's "reserve" amount. This is especially important for the C-block spectrum, which will have open access requirements should the amount bid exceed the government's target of $4.65 billion (which Google, the most prominent name in the auction, could fund out of petty cash).

The C-block nationwide bid was for $1.2 billion, a tidy sum, but a long way from $4.65 billion.

Some quick facts on the auction method being used:

  • C-block spectrum is segmented into three packages: a "nationwide" license, one covering the Virgin Islands and Puerto Rico, and one covering US Territories in the Pacific.

  • D-block spectrum is in twelve regional segments.

  • Bidders submit sealed bids each round.

  • Software calculates minimum bids required to continue participating in the auction and publishes them. Bidders can choose to place the next bid at the minimum amount or drop out.

And so it goes, until there are no more higher bids. As long as the FCC's reserve amount is met, the auction is done and the winners pay for their licenses. If it's not, the licenses are not distributed and we do it all again.

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