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Upcoming FCC Auction Will Mean Better Cell Services

Telecom carriers will begin bidding for a chunk of precious wireless spectrum on Aug. 9, potentially easing the delivery of Internet content over the airwaves. The FCC hopes the auction will propel advanced features such as mobile Web browsing and video. But with spotty cellular phone coverage a problem nationwide, don't be surprised to see many of the winning carriers using it to improve existing services in the near term.

The FCC will auction 1,122 licenses in the 1,710- to 1,755-MHz and 2,110- to 2,155-MHz radio-frequency bands for what it calls Advanced Wireless Services spectrum, meaning that it's intended for new wireless applications that require a lot of bandwidth, such as Web browsing, messaging, and video. The FCC is reallocating the spectrum that's now used for various government and other services. Several major telecom carriers, including Cingular, T-Mobile, and Verizon Wireless, have submitted applications to the FCC in hopes of snatching up more spectrum--a scarce commodity in the United States. It's been about 10 years since a similar auction. Eighty-one bidders were selected to participate out of hundreds of applicants.

T-Mobile likely will be among the most aggressive bidders, since it can't upgrade its network to third-generation cellular without the spectrum. Its top competitors already offer 3G, designed to support multimedia data with speeds ranging from 128 Kbps to several megabits per second. Verizon Wireless likely will be a "bit more surgical" in bidding only to fill in gaps in its coverage needs, Forrester Research analyst Charles Golvin says. He anticipates that if Verizon Wireless gets spectrum, some of it will be used to offer mobile voice-over-IP services. Cingular, a potential bidder, had an incomplete application and has until this week to resubmit.

Several cable companies, including Cable One and Dolan Family Holdings, which has ties to Cablevision, have their sights on the spectrum for potentially offering "triple play" consumer packages that serve up data, voice, and video over IP. Satellite providers also are in the mix with plans to use wireless spectrum for broadband services. DirecTV Group filed a joint application with rival EchoStar Communications under the name Wireless DBS.

The FCC has divvied the spectrum into hundreds of rural licenses--rather than a handful of licenses that span large geographic areas--making it easier for smaller providers in remote cities and towns to bid. They also get a financial advantage in the process; smaller providers that bid on spectrum are required to pay just 75% to 85% of their winning bidding price, according to FCC rules, while large providers pay 100% of their winning bids.

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