The difficulties surrounding the D Block

 

The difficulties surrounding the D Block

Frontline Wireless announced last week [1] that it was "closed for business." According to the rules instituted by the FCC, the company cannot disclose why it shuttered its doors because such information could in some way affect the 700 MHz auction's outcome. The consensus among industry pundits is that Frontline could not raise the $1.33 billion needed to meet the reserve on the D-Block slice of spectrum, because of a downturn in the economy. While some reports speculate that another bidder could swoop in and win the D-Block of spectrum, I don't think it's likely. Sure, the nationwide swath of spectrum is almost as appetizing to a Verizon Wireless, AT&T or Google as the more coveted C-Block, but that may be beside the point.

The deadline for qualified bidders to inform the FCC about which slice of spectrum they intended to bid on was Dec. 3, 2007. At that time, Frontline Wireless still looked like a shoe-in for building out the public-private network. Frontline's goal was to improve public safety communications nationwide. If another bidder wanted to win the D-Block of spectrum during Auction 73, it would have had to be willing to go head-to-head with the highly touted Frontline Wireless, which was run by a former FCC chairman. If such a formidable bidder had its sights on the block of spectrum in early December, chances are the industry would have heard about it by now.

In all likelihood, the FCC will be forced to strip the D-Block of most of the rules [2] associated with it--namely its $1.33 billion reserve price--and re-auction the slice of spectrum well before its June 1, 2008, deadline. The FCC needs to collect the auction revenue by that date and deliver it to Congress, which has already spent the estimated $10 billion that the auction needs to raise. -Brian [3]

P.S. FierceWireless will have all the latest developments surrounding the 700 MHz auction on our website. Check out our ongoing coverage here [4].