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U.S. Spectrum Auction Attracts New Bidders

Which media giants will step forward as bidders in upcoming auctions for wireless spectrum that will be used to launch mobile broadband?

"That is the billion dollar question," says Charles Townsend, president and CEO of mobile wireless leader Aloha Partners. While sizeable chunks electromagnetic spectrum will be available via auction, Townsend says that the extent of bidder demand is not clear. The big unknown is how aggressive existing cellular carriers will be and how many new entrants will emerge from the sidelines.

The advanced wireless auction (AWS) is the first major spectrum auction in almost 10 years. The FCC is expecting to auction off 90MHz of 1700MHz-2100MHz spectrum this summer and all eyes are watching to see who shows up.

Townsend estimates that it will cost $5-$6 billion to build out a wireless broadband network using the AWS spectrum and take up to 5-6 years to complete. The most likely use of this spectrum is for high speed data, voice IP (Internet protocol) and streaming video. Townsend believes the first mobile broadband services will reach the marketplace in 2009.

These infrastructure costs come on top of billions of dollars in spectrum fees auction winners will pay the Federal Communications Commission, which controls spectrum allocation. The Congressional Budget Office estimated this spectrum will generate at least $15 billion in fees for the government.

Potential bidders for spectrum include cable system giants seeking to expand horizontally into "quadruple play" services. Elsewhere, Internet service providers such as Covad, Earthlink and Clearwire are other possible AWS spectrum buyers, as are Internet portal players such as Google or Yahoo. Disney has recently announced two wireless MVNOs ( ESPN Mobile and Disney Mobile) and may be quietly planning on building its own network with AWS spectrum.

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