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from: Wired

FCC to 700MHz Spectrum Bidders: You Better Have Bank

By Bryan Gardiner EmailAugust 20, 2007 | 4:25:57

The FCC has released its first draft (for comment) outlining the rules that will govern the upcoming 700MHz spectrum auction, now set for January 16, 2008. At this point, the message is clear: if you want a chunk of "beachfront" spectrum, be prepared to pay.

In addition reiterating a few known procedures (bidding will be anonymous), the new FCC draft states that those wishing to buy a block of spectrum will need to meet some seriously strict financial preconditions. Specifically, the government agency is requiring a $4.6 billion reserve for the C block of licenses (the large, 22MHz portion that meets the "open access" conditions) for the auction to be valid, while those wishing to bid for the whole shebang will need a whopping $10 billion in reserves.

This message ostensibly reinforces what Reed Hundt, vice chairman of Frontline (and former chairman of the FCC), told Epicenter late last month. Namely, that the FCC is telling the tech industry that if it truly wants open access it better "put up or shut up."

According to the FCC, nearly all of that C block aggregate reserve price will go toward a package of U.S. national licenses. This portion of the spectrum also happens to be the one with two open access conditions attached to its sale mandating that all devices be allowed to access the band and that all applications can be able to run across the network. If the reserve price isn't met, the auction will be rerun without these two conditions in place, according to the FCC.

Interestingly, Google had previously stated its intent "to commit a minimum of $4.6 billion to bidding in the upcoming auction" if the FCC promised four license conditions: (1) open applications, (2) open devices, (3) open wholesale services, and (4) open network access…" Presumably, at least two of these conditions are now being met (for the C block auction) and the reserve price happens to be the exact amount Google promised to bid. Google did not immediately respond to our request for comment.