Media Firms Vie for Spectrum

In the latest round of auctions for new wireless bandwidth, the surprise bids are coming from non-traditional players, namely satellite and cable content providers. The bidding for slices of the airwaves—known as Auction 66—kicked off today, with 168 groups vying for 1122 licenses to lease portions of the 90-megahertz band, to be used for advanced wireless services. As reported by Reuters today, among the Cingulars and Sprints of the world, the bidders also include the DirectTVs and the Time Warners.

The U.S. Federal Communications Commission (FCC) is hoping to raise about US $15 billion in revenue from the leases. Already, $4.3 billion has been deposited by interested parties, according to Reuters. The auction will proceed throughout today, with two rounds of bidding, and continue through tomorrow, with three more rounds, and subsequent business days until the bidders stop. (The FCC reports that Round 1 has concluded with 731 bids valued at a gross of nearly $769 million.)

Interested parties in this auction consist of a myriad of communications firms, both large and small. The biggest deposit, $972.5 million, has been made by a joint venture formed by satellite TV providers DirecTV Group and EchoStar Communications, along with media conglomerate Liberty Media. It is followed closely by a group consisting of cable operators Comcast Corp. and Time Warner and wireless carrier Sprint Nextel Corp., with a downpayment of $637.7 million.

An analyst for investment house Bear Stearns wrote in a recent research note, "We are surprised with the strong interest from the satellite and cable companies." Insiders are apparently not sure what to make of the strong interest from the newcomers, which have disclosed no plans so far for the leases.

In a follow-up report by Reuters, the early frontrunner in the auction appears to be wireless carrier T-Mobile USA, a unit of Germany's Deutsche Telekom AG, which has bid a total of $437 million for 31 licenses. (T-Mobile may be using the current auction to boost its presence in large markets, such as the New York metro area, where it has less spectrum than the other national wireless carriers, according to analysts.)

In our new wireless age, the distinctions between who is a communications company and who is a services or a content one are becoming blurrier, so it might not be as important anymore to ask who your provider is as it is to ask how they are doing the job.


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