Broadband Set to Go Sky High

NEW YORK (AP)—JetBlue Airways Corp. won a government auction Friday for wireless spectrum that could be used to provide in-flight telephone, Internet, or entertainment services.

The winning bid of $7.02 million was placed through New York-based JetBlue's entertainment subsidiary, LiveTV LLC, which provides DirecTV service on JetBlue flights.

The 1-megahertz frequency band sold by the Federal Communications Commission is nationwide and not limited to JetBlue aircraft, opening the possibility that LiveTV will offer the service to other airlines.

Because of FCC rules, auction participants have been unable to reveal their plans for the spectrum. JetBlue representatives did not immediately return calls Friday.

A larger swath of spectrum, 3 megahertz of bandwidth, was won by AirCell Inc. of Louisville, Colo., with backing by Ripplewood Holdings LLC, a New York-based private equity firm. That part of the auction was decided last week, when the other bidders for that band dropped out. The winning bid was $31.3 million.

AirCell makes equipment that provides voice and data service for aircraft passengers and crews through satellites. The equipment has been installed by the three largest fleets of time-share corporate jets, according to AirCell's Web site. An AirCell spokesman did not immediately return calls Friday.

The auction started with nine bidders on May 10. Since last week, however, JetBlue and Space Data Corp. were the sole contenders for the 1-megahertz slot, bidding it up from just above $1 million.

Space Data apparently did not plan to use the spectrum for aircraft. The Chandler, Ariz., company sends signal repeaters high into the air on unmanned balloons. The repeaters convey wireless data from oil company vehicles and pipelines to ground stations.

Space Data is also exploring using its balloons to provide cellular coverage to rural North Dakota, where phone carriers have little incentive to cover the thinly populated prairie with expensive cellular towers.

Both bands sold in the auction are currently used by Verizon Airfone, a subsidiary of Verizon Communications Inc.

Airfone dropped out of the bidding early, with an apparent maximum bid of $12.4 million—surprisingly low for the country's largest telecommunications company by revenue.

Airfone will have now have two years to shrink the bandwidth used by its in-flight phone service, which began in 1984. Airlines with Airfone service include Continental, Delta, United and US Airways.

Airfone spokesman Jim Pilcher said he could not comment on the auction.

The Boeing Co. operates a competing in-flight broadband service, Connexion, for international carriers. It uses satellite links instead of air-to-ground communications. Boeing had earlier expressed interest in the auction but did not take part.