Third Time's a -- Delay, for 3G Wireless Spectrum Auction

In a move that surprised few observers, the Federal Communications Commission postponed -- for the third time -- the auction of spectrum to be used for advanced wireless data services.

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The auction is now set to begin on Sept. 12, a delay of more than six months after the original start date of March 6.

The spectrum licenses up for auction, in the 700-megahertz band, will be used by the big nationwide wireless service providers to build third-generation networks that offer data, as well as voice, traffic. (Spectrum is the range of electromagnetic frequencies used in the transmission of voice, data and video. Only a fixed amount is available, which makes spectrum a coveted commodity. A megahertz is a measure of bandwidth, or the width of a communications channel.)

The fate of this auction has always been iffy, because wireless providers essentially have to kick out the television broadcasters that currently occupy the spectrum. By law, the broadcasters are required to make the transition to digital from analog TV and vacate the spectrum by the end of 2006.

The FCC has said that wireless licensees and TV broadcasters need to voluntarily negotiate the band-clearing issue. Frank Marsala, an analyst at ING Barings, believes that the two parties "can come to voluntary clearing agreements that will allow the wireless carriers to get access to the spectrum sooner than 2006."

Another issue was the proximity of this auction to the one completed last week. Verizon Wireless, the Verizon Communications(VZ Quote - Cramer on VZ - Stock Picks) unit that was a big winner in that auction of spectrum in the 1,900-MHz band, requested a postponement, reasoning that the carriers require time to assess their needs.

The spectrum frequencies up for grabs are useful for all the carriers, as they are close to the 800-MHz frequencies the carriers operate today. However, it's been perceived that Nextel Communications (NXTL Quote - Cramer on NXTL - Stock Picks) will benefit the most because all of its current spectrum is in the 800- and 900-MHz bands. Indeed, shares of Nextel dropped almost 7% Wednesday, the day of the FCC's announcement.