Verizon Wireless, AT&T win big in airwave auction
Verizon Wireless and AT&T were the big winners in a U.S. airwave auction that raised a record $19.6 billion, solidifying their dominance in the cell phone market and dashing hopes that the bidding would yield a new national competitor.
Still, the auction is likely to result in more robust mobile broadband services for consumers, say analysts and Federal Communications Commission officials, who announced the auction results Thursday.
Verizon Wireless was the top winner, spending $9.4 billion and snaring enough licenses in the closely watched C-block to cover the entire country. Under groundbreaking FCC rules, wireless services using that spectrum must be opened to any handset a customer chooses, a break from current practice that forces subscribers to use the devices offered by their carrier.
FCC approval of that mandate last summer prompted Verizon to announce it would open its entire network to any device or software application that meets its technical specifications.
Public-interest advocates had hoped Google, a potential bidder in the auction that championed the open-access mandate, would win the C-block, forging a new national wireless rival.
Verizon also won licenses in cities such as Los Angeles, Chicago, Miami, Oklahoma City and West Palm Beach, Fla. Its airwave purchases "may help (Verizon) close the gap" in spectrum holdings with AT&T, says analyst Rebecca Arbogast of Stifel Nicolaus.
In a statement, Verizon said it achieved the "spectrum depth we need to continue to grow our business and data revenues" and help "satisfy the next wave of services and consumer electronics devices." Verizon spokesman Jeffrey Nelson said new devices for its open-access initiative could be available as early as this summer after the company certifies them as complying with its specifications.
AT&T spent $6.6 billion for licenses in cities such as Washington, Philadelphia, New York, Houston, Baltimore, Denver and Seattle. The airwaves will promote "new-generation" wireless broadband, AT&T says.
The spectrum corralled by Verizon and AT&T will push the giants "further ahead of Sprint and T-Mobile" among national carriers, Arbogast says. Big regional carriers that could have used the auction to stockpile airwaves and challenge the giants largely came away empty. Alltel and Leap Wireless won no licenses, and Metro PCS spent just $313 million for a license in the Boston market.
FCC Chairman Kevin Martin noted satellite TV provider Dish Network with bids of $711 million, won enough licenses to cover nearly the entire country. Martin says Dish could use the spectrum to provide a broadband-to-the-home service that could compete with the phone and cable companies.
Arbogast, however, said the spectrum likely is sufficient only for improved interactive TV services or possibly a video service for mobile phones. Dish would not comment.
Harold Feld of the Media Access Project says the auction did not produce a new home broadband competitor. But Martin said that with their souped-up broadband services, the wireless units of Verizon and AT&T could offer that "third pipe" in regions where their parent companies don't provide land-line phone service. "I think the auction is going to be an opportunity for a platform into people's homes," he said.
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