Electronic Design

Industry Behemoths Gear Up For Wireless Bidding Wars

Less than 24 hours remain before bidding commences on FCC Auction 66, and already more than $4.3 billion in upfront payments are on the table.

Among the 168 qualified bidders, no less than nine applicants anted up more than $100 million to participate in the first Advanced Wireless Services (AWS-1) auction. Wireless DBS LLC, a bidding group that includes DirecTV, Echo Communications, and Liberty Media, put up close to $1 billion to participate in the sale, while SpectrumCo LLC (Sprint Nextel, Comcast, Time Warner) submitted just over $637 million. Other leading bidders included T-Mobile, Cingular, and the Cellco Partnership (Verizon Wireless).

The AWS-1 auction puts at stake 90 MHz of spectrum in the 1710-1755 MHz and 2110-2115 MHz bands, and is expected to bring in somewhere in somewhere between $8 billion and $15 billion. The FCC will auction 1122 licenses: 36 regional economic area grouping (REAG) licenses, 352 economic area (EA) licenses, and 734 cellular market area (CMA) licenses.

At present, the AWS-1 bands are being used for a variety of government and non-government services. The 1710-1755 MHz band is a government band that supports Department of Defense (DoD) communications at 16 protected facilities nationwide. The 45-MHz swath of spectrum is covered by a Congressional mandate that requires that auction proceeds fund the estimated relocation costs of incumbent federal agencies, an effort that is estimated to cost approximately $936 million. The 2110-2150 MHz band is currently licensed to private interests, including local and state government entities, while the 2150-2155 MHz band is licensed to the Broadband Radio Service (BRS). The FCC will relocate entities with licenses in each of the bands to higher frequencies.

FCC auction 66 was slated to start on June 29, but was delayed when three potential bidders filed suit against the FCC for instituting blind bidding in the public sale. To ensure the competitiveness of the auction process, the FCC mandated that applicants competing for licenses in the same geographic license areas could not communicate with each other about bids, bidding strategies, or settlements unless those applicants identified each other on their short-form applications. While the lawsuit did not result in a change of bidding procedures, the commission conceded to delay the auction until August 9 to provide applicants with additional time for planning and preparation.

But on July 28, the FCC threw out its blind bidding mandate, saying that given the $4.3 billion in upfront payments submitted, "the likely level of competition should be sufficient to make anti-competitive outcomes difficult to sustain and therefore the benefits of publicly revealing information on bidder interests and bidder identities likely would outweigh the potential harms."

The FCC estimates that AWS-1 could run several weeks, but it likely could last several months. An auction of just 3 MHz of spectrum in the 800 MHz band earlier this year ended after 143 rounds of bidding—almost three months after the May 10 start date (see "FCC Awards Air-Ground Radiotelephone Licenses" at www.electronicdesign.com, ED Online 12828). A mere nine bidders participated in the Air-Ground auction.

For more information about FCC Auction 66, visit http://wireless.fcc.gov/auctions.

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