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urgentcomm » Magazine Articles » FCC spectrum auction raises $13.7 billion

FCC spectrum auction raises $13.7 billion

Oct 1, 2006 12:00 PM, By Donny Jackson

The FCC last month concluded its auction of advanced wireless services, or AWS, spectrum after 161 rounds, with 104 commercial entities winning licenses in the 1710 MHz to 1755 MHz and 2110 MHz to 2155 MHz bands by submitting bids that will generate $13.7 billion in new revenue for the U.S. Treasury.

As expected, spectrum-needy wireless carrier T-Mobile was the most active bidder, winning 120 licenses at a cost of $4.18 billion. A partnership representing Verizon Wireless bid $2.8 billion for 13 licenses, and a consortium of cable companies bid $2.37 billion for 137 licenses.

Ovum wireless analyst Roger Entner said the cable companies might use their new spectrum as an “insurance policy” if their joint venture with Sprint Nextel — currently supplying the wireless component of its bundled offering — proves disappointing.

“If their Sprint JV goes south, they're not completely naked — they have something to fall back on,” he said.

Entner said the most surprising aspect of the auction was the early exit of satellite companies from the bidding. Meanwhile, the decisions by Metro PCS and Leap Wireless to bid $1.39 billion and $710 million respectively to win large regional licenses may be the most intriguing moves in the auction, he said.

“It's a high-risk strategy for Leap and Metro — they can either hit a home run or they can completely strike out,” Entner said. “Both of them have declared bankruptcy before, so hopefully they've learned something.”