Economy doesn't appear to hurt 700 MHz auction

Fears about the economy's impact on the 700 MHz auction have been unfounded. After 26 rounds of bidding, the auction has raked in more than $18 billion in provisionally winning bids, exceeding the FCC's expectations of between $10 billion and $15 billion.

The auction comes at a time when a meltdown of the U.S. housing and subprime mortgage markets is hurting the ability of companies to raise money. Last month, FCC Chairman Kevin Martin said he wasn't sure this was the right time to move forward with an auction but that the FCC's hands were tied because Congress requires the agency to proceed. Last week, Martin was singing a different tune: "It will probably exceed any other auction that we have had in the past," he said.

We still could see some impact of the economy on the auction, especially when it comes to rural telcos and small wireless ISPs. They don't have access to the capital larger bidders do. Moreover, it doesn't appear the D Block of 700 MHz band, the spectrum that is supposed to be set aside for a nationwide public-safety/commercial network, will get the minimum $1.3 billion bid set by the FCC. Only one bid was made on that Block, for $472 million. Perhaps the real test of the economy's impact will be whether non-traditional players--those whose core business isn't building wireless networks--were aggressive in the bidding.--Lynnette