The Spectrum Auction's Over. Now What?

The FCC’s wireless spectrum auction ended last night after 261 rounds of bidding, raising $19.6 billion for the U.S. government. By this time next year, the winners will be able to use the airwaves to power wireless phone/Internet networks. But what’s next?

In several days, we’ll find out who won what. The big spenders were most likely AT&T (T) and Verizon Wireless, a joint venture of Verizon (VZ) and Vodafone (VOD).

Analysts think Verizon was the buyer of the massive “C” block of airwaves that cover the entire country. It’s also possible, but unlikely, that multiple bidders picked up different regional chunks of the “C” block. This is the swath of spectrum that Google (GOOG) made a big fuss about last year, getting the FCC to force the winner to operate an “open” network — which works with any compatible gadget and software application — using those airwaves. In theory, that’s good news for consumers — but it might underwhelm.

We’ll also find out about the “D” block, the only piece of spectrum that didn’t get the minimum “reserve” bid — and didn’t get a bid after the opening round. Why didn’t it? The winner would have to build out a complex network to share with public safety and emergency personnel. The block should have been a match for Frontline Wireless, a Silicon Valley-backed startup led by former FCC chairman Reed Hundt. But Frontline shuttered days before the auction started. Analysts expect the FCC to “de-link” the “D” block and auction it off separately at a later date.

Depending on when the FCC decides to do that, the auction’s anti-collusion rules will get lifted, according to Stifel Nicolaus analyst Blair Levin. That means that companies involved in the auction can start talking about M&A and other strategic options again — like a no-brainer combination of MetroPCS (PCS) and Leap (LEAP).

See Also:
Spectrum Auction: Why ‘Open’ Access May Underwhelm
Spectrum Auction Update: Bidders Snub Public Safety Block
The FCC Spectrum Auction: The Cliff Notes Version

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