June 2, 2006 1:30 PM PDT

JetBlue wins air-to-ground wireless license

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JetBlue Airways emerged as a winner of a wireless license to offer high-speed Internet access on commercial aircrafts when the Federal Communications Commission auction concluded Friday.

After two weeks of intense bidding, the FCC's auction of 800MHz spectrum ended in 143 rounds, raising $38.3 million for two licenses granting operators the right to offer air-to-ground services.

LiveTV, a division of JetBlue, won the 1MHz license after 120 bids. It will pay $7 million for the license. Verizon Airfone, a division of Verizon Communications, is currently using the spectrum to offer its air-to-ground telephone service on commercial airplanes. The service has never been widely popular due to its high price tag.

The service costs 69 cents per minute for Verizon Wireless customers or for a $10 fee per month, calls cost 10 cents a minute. But for people who are not Verizon Wireless subscribers, the prices are much higher. For domestic calls it costs $3.99 to connect the call and $4.99 for each additional minute. International calls require a connection fee of $5.99 and $5.99 for each minute of calling.

Verizon Airfone had been a favorite to win the auction, but it dropped out of the bidding early. It has until 2010 to open the spectrum to LiveTV.

A spokesman from JetBlue said he was unable to comment on what the company plans to do with its 1MHz license. Some speculate it will offer more in-flight video entertainment and Internet services. JetBlue already offers DirecTV service on its flights.

AC BidCo, an affiliate of AirCell, will pay $31.3 million for the 3MHz license. AirCell already offers air-to-ground voice services for private aircraft.

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