updated 04:45 pm EDT, Tue October 9, 2007
FCC 700MHz Auction Rules
The Federal Communications Commission today solidified some of the rules for the upcoming 700MHz auction early next year, potentially deciding which companies can participate in an event which may decide the future of cellular calling or wide-area Internet services. The US regulatory body has set a $10 billion cap on the value of the entire spectrum that will be available, preventing companies from using money alone to outbid others. Small companies which make no more than $40 million will also receive a discount on their winning bid price, the organization says.
However, the "C" block that requires a winner maintain open access will remain limited to higher-tier bidders, according to the new rules. Any company hoping to use the wireless band will need to meet a reserve price of at least $4.63 billion at first. If the price is not met, a second auction will take place that strips the open access rules but which may change which regions are affected by the auction.
These changes may shift the rules in favor of Google, which had promised to spend $4.6 billion or more to snap up the newly available wireless frequency to ensure that the company itself and relative newcomers could compete against incumbent cellular providers. Multiple larger US carriers have objected to the auction's open access rules as it would threaten their business models, which currently rely on locking customers into long-term contracts to get access to certain devices and services. Verizon recently sued the FCC claiming unfair exclusion and has reportedly conducted illegal lobbying to persuade FCC chairman Kevin Martin to ease the rules and favor a locked-down model.
If successful, Google has suggested it would encourage the development of long-range wireless Internet access that could be used by any compatible hardware and software. The company is said to be developing a mobile OS whose open-source, platform-independent nature would encourage such access. Handset makers which operate in the US, such as Apple and Nokia, could also benefit in the long term by the inclusion of a technology which would function with more than one carrier and without restrictions on which software can be used.
As part of its updated rules, the FCC also pushed back the start date for the auction by eight days, moving it to January 24th of next year. No specific reason was given for the delay.