Cable, satellite firms confirmed as bidders in auction

Aug 2, 2006 4:15 PM, By Donny Jackson

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A group of cable providers and a partnership of satellite-TV companies are among the approved bidders for the advanced wireless services (AWS) spectrum auction that is scheduled to begin next Wednesday.

Satellite companies Echostar and DirecTV are tied to a consortium called Wireless DBS. Cable companies Comcast, Cox and Time Warner Cable are part of a bidding group known as SpectrumCo. In both cases, the intent to bid could be a sign that the video-focused companies want to be able to offer a bundle that includes fixed and mobile voice, video and data—a package incumbent phone carriers Verizon and AT&T plan to offer after securing nationwide video licenses they hope Congress will authorize this year.

While the cable consortium has an MVNO (mobile virtual network operator) agreement with Sprint Nextel, the satellite companies need spectrum to include a mobile component in their portfolios, said Roger Entner, wireless analyst for Ovum.

“The [satellite companies] have nobody to play with,” Entner said. “Sprint has an exclusive agreement with the cable guys. Verizon and Cingular offer their own cable television, and T-Mobile is not very interested.”

Entner said he believes the cable firms are entering the auction “to keep Sprint honest.” If the cable companies win spectrum and build their own wireless networks, some industry observers have questioned Sprint Nextel’s ability to compete without being part of a bundle. Entner doe not believe such a scenario would damage the wireless carrier significantly.

“[Sprint Nextel] would have egg on its face and would have lost a couple of million dollars in investments, but business-impact-wise, it’s not that huge—they haven’t made any money off [the cable arrangement] yet,” Entner said.

“I don’t think you have to be part of a bundle. Basically, a bundle today is another word for ‘discount,’ and that’s not a way to do business.”

Entner said he believes the FCC auction will generate more than $8 billion in bids. Some analysts have estimated that the auction bids will total as much as $15 billion.