2008 United States wireless spectrum auction

Lore & Background

The 700 MHz spectrum had previously been used for analog television broadcasting on UHF channels 52 through 69. Full-power TV stations were forced to transition to digital broadcasting to free 108 MHz of spectrum for newer wireless services, with most analog broadcasts ceasing on June 12, 2009. Digital broadcasts allowed channels to be placed on adjacent frequencies without guard bands, making the 700 MHz band available for reallocation. A similar reallocation had occurred in 1989 to expand analog cellphone service, which eliminated TV channels 70-83 and created a situation where old TV tuning equipment could listen to cellular calls, though such activity was made illegal.

Prior to Auction 73, some 700 MHz spectrum licenses had already been sold in Auctions 44 and 49. For example, Qualcomm MediaFLO used channel 55 for mobile TV broadcasting starting in 2007, later selling that channel to AT&T Mobility. Dish Network bought channel 56 licenses in most media markets. The FCC designed a new multi-round package bidding process for the auction, limiting bidders to 12 items and 12 package bids. Bidders could bid on individual licenses or all-or-nothing packages, which helped avoid the exposure problem when licenses are complements. The provisional winning bids were the set of consistent bids that maximized total revenues.

Google asked the FCC to adopt four open access policies: open applications, open devices, open services (wholesale leasing), and open networks. The FCC ruled in favor of Google's requests but only implemented two requirements—open applications and open devices—on the upper C-Block. Verizon filed a lawsuit against the FCC on September 13, 2007, calling the rules "arbitrary and capricious," but dropped the lawsuit on October 23 after losing an appeal for speedy resolution. CTIA - The Wireless Association also challenged the regulations but dropped its lawsuit on November 13, 2008.

Reader's Guide

The 2008 700 MHz auction represented a significant shift in spectrum allocation and regulatory policy. By forcing full-power TV stations to transition to digital broadcasting, the FCC freed 108 MHz of spectrum for wireless services, addressing growing demand for mobile broadband. The auction's package bidding process was a first for the FCC, designed to allow bidders to bid on complementary licenses without the exposure problem, and it served as a test case due to the limited number of licenses (12) and regional bands. Google's involvement was pivotal: although the company was outbid and did not win any licenses, its active bidding helped trigger the $4.6 billion reserve price, which activated the open platform restrictions Google had sought. This resulted in the C-Block being subject to open applications and open devices requirements, a partial victory for network neutrality advocates. The auction also set aside 20 MHz of spectrum for a public/private partnership for a nationwide broadband network tailored to public safety, with the commercial licensee allowed to use adjacent spectrum and available public safety bandwidth for data services. Verizon's and CTIA's legal challenges to the open access rules were ultimately dropped, solidifying the FCC's authority to impose such conditions. The auction's legacy includes influencing future spectrum auctions and the ongoing debate over open access and network neutrality.

Did You Know?

• Google paid $287 million to participate in the auction but did not win any licenses, resulting in an estimated $13 million loss from interest costs.
• Verizon filed a lawsuit against the FCC on September 13, 2007, to remove open access provisions, but dropped the lawsuit on October 23.