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U.S. FCC Spectrum Auction Will Now Be Open

The alliance landscape for an August 9th spectrum auction to launch new-generational wireless mobile broadband is clearer, after the Federal Communications Commission (FCC) locked in applicants. Bidders put up so much money in advance deposits that the spectrum action will be an "open" process, with all bid/bidder results announced after every round, instead of blind bidding.

The FCC received $4.3 billion in deposits, just over the 3x multiple on the FCC's $1.3 billion minimum threshold to switch to open bidding. Overbidding is expected to lift the U.S. Treasury haul to $10 billion or more.

"It was the prospective nationwide players who pushed up the upfront deposits," notes Sharon Armbrust, Kagan Research senior consultant. "Nine companies anted up over $100 million each, representing 89 percent of all deposit money."

The group with the highest upfront payment is a satellite TV consortium uniting DIRECTV (controlled by Rupert Murdoch's News Corp.) and EchoStar Communications, which are joined by cable TV network holding conglomerate Liberty Media. The other bidders include cable system giants and cell phone carriers, looking to bulk up spectrum capacity as they diversify from voice wireless to mobile broadband.

Armbrust believes that the open bidding procedure will help participants make intelligent bids, which would be more difficult in a blind auction where identities of rivals are unknown. She also believes another round of post-auction deal-making is likely with bidders who end up holding patchy blocs of spectrum partnering with peers whose holdings fill gaps or simply buying needed geographies.

The August 9th auction will assign 1,122 licenses to launch what the FCC calls advanced wireless services (AWS) in the 1710-1755 MHz and 2110-2155 MHz bands. This is the FCC's biggest spectrum auction in 10 years. At a yet to be determined date in early 2008, the FCC will auction an even more choice spectrum in the 700 MHz band, which sports better propagation characteristics because it is in a lower frequency. So bidders that emerge with little AWS spectrum will have another opportunity to acquire frequencies to launch mobile services that will include mobile TV.

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