FCC airwaves auction opens bidding

The US Federal Communications Commission (FCC) has formally opened the bidding process on a spectrum auction that looks to raise billions in revenues and expand the coverage and quality of wireless broadband networks.

The Commission on Tuesday kicked off the "clock phase" portion of the auction, in which telco providers submit their initial bids to acquire the spectrum space held by television broadcasters.

This phase is the latest step in the years-long process that will free up radio spectrum space previously reserved for over-the-air TV broadcasts to be used for wireless broadband networks.

The auction is divided by both frequency and geography, with telcos bidding for spectrum in various metropolitan areas of the US. As would be expected, the highest prices are likely to be fetched in major cities such as New York and Los Angeles, while sparsely populated rural areas will command much lower prices.

The big buyers are largely expected to be major national carriers, though pundits have noted that the expensive acquisitions made by some of the biggest carriers could limit spending, as could the absence of Sprint from the process.

Among those also able to bid on the auction will be smaller local carriers, which have been encouraged by additional FCC protections.

The auction process is likely to continue for some time, as the FCC has set a "clearing cost" goal of $86bn in total bids, more than double what analysts estimate telcos will bid nationwide. This, in turn, would lead to a second round of bidding and a possible lowering of the clearing cost by the FCC.

With their pockets stuffed from the auction, the TV broadcasters will then either move their channels to different frequencies or opt to share spectrum space with other local stations.

The FCC has promised that the auction will not result in consumers losing local TV channels or needing to purchase new hardware. ®