RealTime IT News

FOR SALE: Spectrum

Let the bidding begin.

Wednesday morning, the Federal Communications Commission (FCC) opens its advanced wireless services (AWS) auction with hopes of bagging as much as $15 billion from cell phone providers, cable companies, satellite broadcasters and outright speculators.

Given the explosive demand for spectrum to deliver wireless video and broadband services, the FCC might well hit its target.

In all, the FCC will put up for auction 1,122 AWS licenses in the 1710-1755 MHz and 2110-2155 MHz bands. The spectrum was previously occupied by the Department of Defense.

The country's dominant cell phone providers -- Verizon Wireless, Sprint Nextel and Cingular -- certainly all want a piece of the action and are expected to be major players in the auction, which may last up to a month or longer.

The Big Three will likely face fierce bidding from T-Mobile, the nation's number four cell phone provider. A unit of Deutsche Telekom, T-Mobile USA currently lacks the capacity to provision mobile broadband.

Cable giants Comcast, Time Warner and Cox also figure into the equation as they seek to add wireless phone service to their popular bundles of television, telephone and broadband.

Satellite television providers DirecTV and EchoStar are also expected to make a serious splash in the bidding as they increasingly feel the pinch from bundled cable offers.

DirecTV and EchoStar, fierce competitors on any given day, are so serious about grabbing some spectrum for broadband services they formed a partnership known as Wireless DBS and dropped a $972.5 million check on the FCC to guarantee their bidding spot.

Comcast is also playing the combination game, joining with Sprint Nextel to put up $637.9 million to grab a spot in the auction queue.

Adding to the mix are speculators such as Wall Street money manager Mario Gabelli, who last month paid a $130 million fine to settle civil litigation charges he rigged a few bids in a previous FCC spectrum auction.

According to the Department of Justice (DoJ) complaint, the FCC established rules for certain auctions that permitted only "small" or "very small" businesses to participate or to qualify for bidding credits and favorable financing.

The DoJ said although Gabelli and his affiliated companies did not qualify for these auctions, he nevertheless masterminded a scheme to participate in the wireless auctions.

Despite the fine, Gabelli and his affiliates qualified for this FCC spectrum auction.

For the losers of the complex process, hope awaits in 2008, when the FCC is expected to auction off the spectrum being deserted by television broadcasters moving to digital broadcasting.

That auction is expected to shatter this month's expected record proceeds, since the spectrum previously used by the broadcasters can penetrate through mountains and dense urban areas.