U.S. regulators plan to sell airwaves starting May 10 to provide communications services like high-speed Internet to U.S. air travelers.

The U.S. Federal Communications Commission said on Wednesday it plans to auction airwaves now used by phones embedded in airplane seats. Those phones, operated by a Verizon Communications (NYSE:VZnews) unit, are not used regularly because of the high cost.

The financially strapped airline industry could generate a new stream of revenue by partnering with companies wanting to offer high-speed Internet, known as broadband, or a cheaper on-board telephone service.

Verizon plans to bid in the sale so it can offer wireless broadband during flights, according to company officials. It could take about a year for Verizon to deploy if it wins a license, they said.

"We’re certainly planning on being successful at the auction," Bill Pallone, president of Verizon Airfone, said in a telephone interview. "Primarily, initially we believe it will be data (service), which is the biggest usage we anticipate here in the States at least."

The FCC proposed setting $5 million as the minimum the auction must raise for the sale to be completed. Cingular Wireless, the biggest U.S. wireless carrier, declined to comment on whether it would bid.

The FCC is also weighing whether to allow consumers to use their own cell phones on planes, but that would need agreement from aviation regulators and the FCC has yet to make a decision amid fears of a backlash from many fliers who see airplanes as a cell phone-free zone.

Already Boeing (NYSE:BAnews) offers a satellite-based in-flight Internet service, known as Connexion, on foreign carriers like Germany’s Lufthansa (LHAG.DE) and Israel‘s El Al (ELAL.TA). The cost ranges from $9.95 an hour up to $26.95 for 24 hours.

The FCC set up scenarios for splitting the airwaves and will go with whichever one receives the highest bids. The possibilities include two overlapping licenses for 3 megahertz (Mhz) of airwaves, or one 3 Mhz exclusive license and another 1 Mhz exclusive license.

FCC Commissioner Michael Copps, a Democrat, expressed concern in 2004 that the way the agency has set up the licenses could lead to a single provider, a monopoly that could prey on consumers.

Under the FCC’s rules, Verizon has a nonrenewable, five-year license to operate its current airborne service and after the auction is completed, the company would be limited to using 1 MHz of the airwaves.

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