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Verizon, AT&T rule at 700 Mhz

March 20, 2008 |  6:05 pm

Any auction that brings in almost twice as much money as expected isn't likely to be considered a failure. That's the case with the FCC's recently completed auction of the 700 MHz airwaves, which raised about $19 billion. But the auction of these frequencies, which have been used for UHF TV signals, didn't live up to the hopes of many who make their living off teh Interwebs. That's because the sell-off apparently will not produce a new, national provider of broadband Internet access, even though the frequencies would be up to the task, technically speaking.

The main winners were Verizon Wireless and AT&T, which pledged $9.63 billion and $6.64 billion, respectively, for prime airwaves from coast to coast. (You can download a nice analysis from Stifel Nicolaus here.) Their most likely use for their new assets: upgrading their mobile data services with higher speeds and better coverage. Verizon snapped up the C block, which means it will have to comply with two consumer-friendly requirements that the FCC imposed on those frequencies: it must allow customers to use any device and run any applications they wish on the network, as long as they don't damage it. Verizon Wireless resisted the requirements at first, then reversed field and announced that it would adopt that approach on its entire network.

So in a sense, consumers come away from this auction with a victory, albeit not the one they need the most. There's also the intriguing moves by EchoStar, which snapped up licenses in the E block for $711 million. There's not as much bandwidth in those licenses -- 6 MHz, compared to 12 MHz in the ones AT&T won and 22 MHz in the C block. "They’re not doing a big mobile broadband pipe," said analyst Blair Levin of Stifel Nicolaus. "This is not the third pipe that’s going to compete" with DSL and cable modems. Nevertheless, he said, EchoStar will have enough spectrum across the country to provide some kind of enhancement to its satellite TV customers -- a video-on-demand service that's more competitive with cable TV's offerings, perhaps, or even mobile video. As EchoStar might say, stay tuned.

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