FCC's wireless spectrum auction fetches $14 billion

Now to see what Cingular, T-Mobile, Verizon and others do with their wireless winnings.

Five weeks and nearly $14 billion later, the FCC’s Advanced Wireless Services auction is over.

Vendors such as Cingular, Sprint, T-Mobile, and Verizon Wireless collectively bid $13.9 billion for spectrum licenses previously used by the federal government.

The FCC sold 1,087 licensees to 104 bidders in the 1710-to-1755-MHz frequencies during 161 rounds of bidding. The auction started Aug. 9.

“This was one of two opportunities for [wireless service providers] to plan for the future,” says Tole Hart, a research director at consulting firm Gartner. The FCC is holding another auction for spectrum licenses in the 700-MHz band in 2008, and Hart says incumbent wireless carriers will flock to it.

Some wireless service providers, such as T-Mobile, needed to bolster their spectrum holdings to roll out 3G networks in earnest. T-Mobile wound up as the highest overall bidder, at $4.2 billion.

Others such as Verizon and Sprint bid aggressively to support future services that will require more spectrum, Hart says.

Sprint and cable service companies Cox, Comcast and Time Warner Networks bid as a partnership called Spectrum Co. Hart says considering Sprint’s current wealth of spectrum assets, it's likely the cable companies will use their new spectrum to expand their partnership with Sprint.

Other big winners were regional wireless service providers MetroPCS and Leap Wireless. These providers are expected to use their spectrum winnings to expand services into new markets, Hart says.

Two surprises of the auction were the fact that the satellite television companies dropped out of the bidding as early as they did and the fact that Alltel did not participate, Hart says. “Considering there are only two foreseeable opportunities to build up spectrum, it is somewhat surprising that Alltel didn’t participate,” Hart says.

Winning bidders are required to make a down payment to the FCC 10 days after the close of the auction, which was Sept. 18. They must file additional paperwork and make final payments before the spectrum licenses will be issued. The FCC says all of these steps will impact when the licenses are distributed.

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Copyright © 2006 IDG Communications, Inc.