Rural Carriers Were Big Losers in 700MHz Auction

If anyone lost in the recent 700MHz spectrum auction, it was rural carriers. The FCC set reserve prices too high for small companies to afford individually and its anticollusion rules kept them from banding together to buy airwaves as a group. Plus, large providers were able to bid on rural spectrum, running up prices, said one organization.

“If you’ve got more money than anybody else, you can buy it all up,” said Mike Higgins Jr., president of the Rural Telecommunications Group (RTG). “That was really my biggest gripe about it.”

Not only did the auction’s setup reduce smaller carriers’ chances of success, it went against the FCC’s stated intent for the outcome.

“We need a real third broadband competitor,” FCC Chairman Kevin Martin said in July 2007 when the FCC presented its auction rules. The spectrum, he added, “presents the single most important opportunity for us to achieve this goal. Depending on how we structure the upcoming auction, we will either enable the emergence of a third broadband pipe – one that would be available to rural as well as urban American – or we will miss our biggest opportunity.”

It looks like the FCC missed. Indeed, a number of activists grouse that the FCC put nationwide spectrum in the hands of behemoths AT&T Inc. and Verizon Wireless. Because the FCC set reserves so high on some blocks, there was little competition from small and rural carriers, the RTG said. That meant one of the great hopes for Auction 73 – that providers reaching unserved areas would snag valuable spectrum – did not materialize.

“It is disappointing that new competitors and innovators won’t have access to the spectrum to give consumers the benefits of real broadband competition,” said Gigi Sohn, president and co-founder of the Public Knowledge think tank in Washington, D.C.

Perhaps the biggest hope for rural coverage was the D Block. This was the piece of spectrum that was to be used for a public-private partnership. The idea was for first responders to use the bandwidth during a national emergency; at all other times, the spectrum would operate for profit. But the D Block didn’t sell.

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