Wireless auction raises a whopping $44.9 billion

Telecoms (and even a few private equity firms) aggressively bid for a host of newly released short-range wireless spectrum from the FCC. But the competition is just getting started.

Jose Luis Magana/AP/File
Wireless companies bid more than $44 billion in an FCC spectrum auction. Here, FCC chairman Tom Wheeler gestures during a speech in Washington, D.C.

Apparently, better connections for your smart phone is worth $44 billion.

That’s what telecoms seemed to indicate at a Federal Communication Commission (FCC) auction that ended Thursday. The auction raised $44.9 billion to sell off licenses to blocks of short-range wireless spectrum.

Previously unavailable and largely unwanted because this wireless spectrum can only transport signals across short distances, the smart phone game is getting too competitive for any spectrum to go unclaimed.

The idea is that in the future, as smart phones become even more ubiquitous, the short-range signals will be able to shoulder more of the high bandwidth data (like streaming videos and multimedia messages) over short distances. This will be especially important in big cities. Records from this auction show New York City and Los Angeles regions had some of the highest and most competitive bidding. But even mid-major, growing regions, such as Louisville, Ky., and Portland, Maine, showed higher-than-expected bids.

At the moment, we don’t know which companies ended up with the biggest wins – bidding is confidential and the FCC says it won’t release details just yet. But we do know that more than 70 companies participated, spanning from wireless heavy hitters such as AT&T and Verizon to satellite broadcaster Dish, and even some private equity firms and individuals. The auction began without much notice by the FCC last November and ended Thursday after 341 rounds of bidding. This wireless spectrum auction also vastly exceeded revenue expectations – the last auction of this kind in 2008 only brought in about half the amount.

This news comes after it became known that Google is planning to launch its own wireless service using T-Mobile and Sprint’s networks. The major tech company has also previously lobbied the FCC to open up even more wireless spectrum, likely to allow for better streaming and potentially to facilitate short-range wireless plans in big cities.

Don’t expect the change to come about immediately, however. Some of the frequencies are still in use by the US government. The earliest will be available in nine months, while others may not be available for up to 10 years. That being said, it shows telecoms (and increasingly interested financiers and broadcasters) are settling in for the smart phone long haul.

It's not just your smart phone that benefits from this bidding war. Engadget points out part of the record-breaking amount of money raised by the government will go to a better 911 call network, a nationwide broadband public safety network, and reducing the deficit.

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