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Carriers, Startups Face Off Over 700-MHz Auction

The FCC on Wednesday announced technical specifications for the upcoming 700-MHz auction, but put off deciding exactly how the spectrum will be divided and sold off.

Setting up a face-off between the major U.S. carriers and alternative wireless providers over the most valuable available slice of radio-frequency spectrum, the Federal Communications Commission on Wednesday announced technical specifications for the upcoming 700-MHz auction but put off deciding exactly how the spectrum will be divided and sold off.

The Congressional Budget Office has estimated that the FCC auction, scheduled for the end of this year, could bring as much as $15 billion into the federal treasury. Carriers spent $13.9 billion in last year's sell-off of "AWS" spectrum.

Considered prime territory for providing advanced wireless broadband services, the swath of airwaves in the 700-MHz band is being vacated by television broadcasters as they make the transition to digital TV. Last year Congress mandated that the FCC auction off the bandwidth by January of 2008, but last night's unanimous decision to put off a final ruling on the sale's structure raises the question of whether the FCC can still meet that deadline.

"The most important step we can take to provide affordable broadband to all Americans is to facilitate the deployment of a third pipe into the home,'' said FCC Chairman Kevin Martin. "The upcoming auction represents the single most important opportunity for us to achieve this goal.''

Haggling over how the auction would proceed and 11th hour proposals delayed the agency's monthly meeting by hours, reported Reuters. The meeting was scheduled for 10:30 a.m. EDT, but did not start until well into the evening.

At stake is how to divide up the 60 MHz of spectrum between public safety, emergency response, and commercial users. A startup called Frontline Wireless LLC, headed by a trio of veteran telecom executives including former FCC chairman Reed Hundt, has proposed the building of a nationwide broadband network that would be available for public-safety use during emergencies and leased to commercial carriers at other times. Asking for 10 MHz of bandwidth to be set aside in the auction for this hybrid nationwide network, Frontline says its system would support multiple network technologies and quickly reallocate how bandwidth is shared among different users. (A detailed breakdown of various proposals can be found on

Cyren Call, another startup headed by Nextel co-founder Morgan O'Brien, has put forward a similar proposal for a shared-use network that last year won endorsement from public-safety groups. Some public-safety officials have questioned the Frontline proposal, saying the resulting system would not be under their control.

The big carriers say Cyren Call and Frontline are just trying to game the system to subsidize their wireless network ventures. AT&T and Verizon Wireless have opposed both proposals, saying they violate current telecommunications law. They are asking for all 60 HMz to be put up for auction to the highest bidders, no strings attached. The Frontline proposal would "significantly devalue the spectrum,'' as Steve Largent, president of the industry trade association CTIA, told Martin in a letter earlier this month.

Commissioner Michael Copps, one of two Democrats on the five-member FCC, shares the carriers' skepticism. The Frontline proposal, he said last night, is "a tantalizing prospect, but only if it works as promised, and there's the challenge,'' he said.

A coalition of consumer groups called Save Our Spectrum has demanded that the deep-pocketed wireless carriers not be given priority in allocating the prized bandwidth. "Wireless broadband has not been a useful 'third pipe' and will not be in the near future if this spectrum if auctioned to the very same vertically integrated telephone and cable incumbents that dominate the wireline market," the group said in a statement earlier this month.

Last week, House Energy and Commerce Committee Chairman John Dingell of Michigan said the Frontline proposal offers "a technologically efficient way to achieve worthwhile policy objectives while preserving an open auction forum."

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