WASHINGTON — After seven rounds of a Federal Communications Commission (FCC) auction, a partnership formed by DirecTV and EchoStar had bid more money than any other contender for a number of coveted spectrum licenses.
The auction began Aug. 9, and after seven rounds of bidding, Wireless DBS LLC, a joint venture of El Segundo, Calif.-based DirecTV and EchoStar of Englewood, Colo., had committed $470.6 million towards 10 licenses covering various areas throughout the United States.
Wireless DBS was followed by SpectrumCo LLC, a joint venture of the major cable companies including Comcast Communications and Time Warner Cable, which had committed $307.7 million towards four licenses.
T-Mobile of Bonn, Germany, was the third-highest bidder, committing $265.8 million for 24 licenses, according to the FCC’s Web site.
The spectrum can be used for advanced wireless services, which can include everything from mobile Internet and messaging services to full-motion video.
T-Mobile and Wireless DBS had consistently been switching back and forth as the high bidder during the auction’s first two days, with SpectrumCo LLC finishing third. But during the morning of Aug. 11, other wireless companies and joint ventures began capturing major licenses with aggressive bids.
After two initial bidding rounds Aug. 9, the auction proceeded with three bidding rounds each day. The bidding was scheduled to continue until there no more bids are submitted. Applicants have one chance to submit a bid during a one-and-a-half-hour time period. There are 168 eligible bidders, largely wireless carriers, but also includes the satellite contingent and some cable operators, for 1,122 total licenses. Bidding on all of those licenses was still ongoing after the first seven rounds.
The available spectrum has been divided up according to geographical area. The largest bids have pursued spectrum segments encompassing large areas in the West and the Great Lakes regions.
Eligible companies have remained quiet on what they plan to use the spectrum for, citing FCC restrictions. But analysts have projected that satellite operators are interested in the spectrum for broadband purposes, allowing them to offer a “triple play” package to their customers that encompasses telephone, television and Internet services.
Jimmy Schaeffler, chairman and chief security officer of the Carmel Group of Carmel, Calif., said Aug. 11 that Echostar and DirecTV have the most at stake in this auction.
“If they don’t step up for that critical triple ‘bundle’ of services, they’re going to become less and less relevant,” Schaeffler said, predicting that WBS will finish the top bidder for the auction, or at least in the top two or three.
During conference calls with investors Aug. 11, representatives from DirecTV and Echostar dissuaded speculation that the Wireless DBS partnership is the sign of a potential merger to come (see related story, p. 6).
The auction has brought in just under $2 billion worth of bids so far, and the FCC has predicted that it could generate as much as $15 billion as time progresses. Analysts have projected it could take several weeks before the auction is completed. Around 600 licenses have yet to receive bids.
