Credit crunch won't stop airwave auction

Federal regulators are proceeding with plans to put two valuable chunks of airwaves up for sale, even though the nation's financial crisis might make it difficult for potential bidders to raise adequate financing, the Wall Street Journal reports.

The Federal Communication Commission is expected to release draft rules for the re-auction of airwaves that would be used to create networks that allow first responders and other emergency services personnel to communicate more effectively. The plan faltered earlier this year when the first effort to sell airwaves attracted no winning bids. Potential bidders were concerned about onerous conditions required of the winner. This time, the FCC is considering relaxing some of those conditions, including cutting the minimum bid to $750 million from $1.3 billion.

Separately, the FCC is considering an auction of airwaves that would require the winner to offer free wireless Internet service to consumers.

The turmoil in the credit markets raises a potential dilemma for regulators, who want to hold the two auctions as early as next spring. Smaller companies and start-ups could have problems raising financing and bids would likely be lower. In the case of public safety airwaves, that could provide an opportunity for larger carriers, such as AT&T Inc. and Verizon Communications Inc. to expand their already robust airwaves holdings relatively cheaply.

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