Verizon, AT&T cheer spectrum auctions; $7B earmarked for public safety network

Congress appears poised to approve spectrum auctions that could deliver valuable radio waves to Verizon Wireless (NYSE:VZ), AT&T Mobility (NYSE:T) and the rest of the nation's carriers. The legislation, which could receive President Obama's signature as early as this weekend, also allocates $7 billion for the creation of a nationwide wireless broadband network for firefighters, police officers and other public safety officials.

"We applaud House and Senate negotiators for doing something truly important to our nation--successfully crafting major spectrum legislation," wrote Jim Cicconi, AT&T's senior executive vice president of external and legislative affairs, on the company's policy blog. At every opportunity, AT&T has expressed its need for additional spectrum to meet the data demands of its subscribers; the carrier's failed $39 billion bid to acquire T-Mobile USA was largely an effort by AT&T to obtain more radio waves. Verizon, Sprint Nextel (NYSE:S) and other carriers issued similar statements in support of the legislation.

Also in the legislation: a provision that would allow the FCC to create bands of unlicensed airwaves--white space spectrum--that could be used for Wi-Fi-type applications. Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT) and others have petitioned for additional spectrum for unlicensed applications.

According to multiple reports on the situation, lawmakers expect to generate as much as $16 billion from the auction of TV broadcasters' spectrum. The cash would be partly be used to offset the cost of extending unemployment benefits in the payroll-tax-extension legislation. Under the somewhat complex agreement reached in Washington by Democratic and Republican lawmakers, TV broadcasters that voluntarily give up their spectrum would receive as much as $1.75 billion in auction proceeds in return. Public safety officials would get a block of spectrum worth around $3 billion and auction proceeds of around $7 billion in order to build a nationwide, interoperable communications network--a network that public safety officials have been calling for since the terrorist attacks of 9/11 highlighted the inability of some emergency responders to communicate with each other.

Under the legislation, the FCC wouldn't be able to block specific companies from competing in the spectrum auctions, but it could limit the amount of spectrum companies could obtain on a market-by-market basis.

The FCC has been calling for incentive auction authority since 2010, and FCC Chairman Julius Genachowski has made reclaiming up to 120 MHz of broadcast spectrum for wireless a centerpiece of his national broadband plan. The CTIA has pushed heavily for the auctions. However, the auctions are likely to take years to set up and conduct. At stake is a total of $25 billion that could be generated by the auction of spectrum licenses currently held by the nation's local TV broadcasters, which have pushed for the auctions to be purely voluntary.

"Tens of millions of Americans rely every day on local TV broadcasters for news, entertainment, sports and life-saving weather warnings," Gordon Smith, president of the National Association of Broadcasters, said in a statement, according to Bloomberg. "We look forward to working with Congress and the FCC to implement an incentive auction program that does not jeopardize that service."

For more:
- see this Bloomberg article
- see this Wall Street Journal article (sub. req.)
- see this New York Times article
- see this AT&T post

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