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.
