Airwaves sale grosses $13.9 billion
WASHINGTON (Reuters) – The U.S. sale of airwaves for advanced wireless services grossed a record $13.9 billion when it ended on Monday, and spectrum-hungry wireless carrier T-Mobile USA, Verizon Wireless and a group of cable companies were the highest bidders.
The Federal Communications Commission sale of 1,122 licenses began on August 9 and ended after no bids or withdrawals in the 161st round. While 168 bidders qualified to participate, 104 stayed in the bidding and won 1,087 licenses.
The U.S. Treasury will net about $13.7 billion from the FCC sale because the agency gives discounts of up to 25 percent to smaller companies to encourage their participation. Payments will likely be due next month.
The winning companies are expected to use the airwaves to expand and improve existing voice services as well as expand their high-speed Internet and video services. There are about 219 million wireless subscribers in the United States.
“Although we cannot envision our lives without access to the Internet, I believe we are only beginning to imagine the way mobile broadband networks will impact our lives — changing the business and entertainment possibilities available to consumers,” FCC Chairman Kevin Martin said.
The traditional wireless carriers faced tough competition in the auction from television providers, including the top U.S. cable and satellite companies like Comcast Corp. (CMCSA) and DirecTV Group Inc.
The companies are competing to offer consumers a package of traditional and wireless telephone, television and high-speed Internet services, which often command well over $100 a month and are viewed as highly profitable to providers.
Some of the airwaves sold in the auction are now being used by government agencies and it will likely take three to four years for the agencies to stop using them. The costs of the transition, about $936 million, will be covered by proceeds from the sale.
In a 2001 sale, the FCC had grossed $17.6 billion but most of it was voided after a court ruled that almost all the licenses sold were improperly taken back from a company in bankruptcy protection, NextWave Telecom.
KEY FOR T-MOBILE, CABLE PROVIDERS
Winning more airwaves was crucial for T-Mobile, the No. 4 U.S. provider and a unit of Germany’s Deutsche Telekom AG , because it has less airwaves in the top markets than its larger competitors.
T-Mobile won 120 licenses with bids of almost $4.2 billion, which includes regional licenses that cover large portions of the United States as well as individual licenses for key markets like New York, Chicago and San Francisco.
Another top bidder was a consortium of major U.S. cable providers — Comcast, Time Warner Inc. (TWX) and Cox Communications — teamed up with the No. 3 wireless carrier, Sprint Nextel Corp.
The group, named SpectrumCo LLC, won 137 licenses with bids of $2.4 billion, including airwaves that cover the northeastern United States and Washington D.C., Detroit, and Atlanta, among other cities.
“At a minimum, it’s going to benefit SpectrumCo because they made a very aggressive showing in this auction as well as smaller guys, but everyone will be constrained by the relocation process,” said Jessica Zufolo, an analyst with Medley Global Advisors.
However, not all television providers stayed in the game. A joint venture of rival satellite providers, DirecTV and EchoStar Communications Corp. (DISH), dropped out after a few days of bidding despite making the largest deposit of all bidders ahead of the sale.
Cingular Wireless and Verizon Wireless, the top two U.S. wireless providers, also were other top bidders in the sale.
Source- http://money.iwon.com
Technorati : Cingular, Mobile, T-Mobile, USA, Verizon Wireless
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