The FCC launches its latest wireless auction tomorrow, which means you’re going to be deluged with dense stories about spectrum, licenses and bidding strategies. Little of it will make sense, in large part because there’s not going to be much news. But our SAI Spectrum Auction Primer will help make it more comprehensible.
Who’s In, Who’s Out?
There are 214 approved bidders. The ones you care about include wireless companies like AT&T (T), Verizon Wireless (VZ, VOD), Leap (LEAP), and Metro PCS (PCS); cable firms Advance/Newhouse, Cox, and Cablevision (CV); satellite provider EchoStar (DISH), chip maker Qualcomm (QCOM), and Google (GOOG). On the sidelines: Sprint Nextel (S), T-Mobile (DT), DirecTV (DTV), Clearwire (CLWR), and Frontline Wireless, which dropped out of the auction earlier this month.
Who Wants What?
The big prize is the “C-block,” a huge swath of spectrum that has a minimum price of $4.6 billion. The big wireless guys want this so they can build a new wireless broadband network. This is also what Google is interested in. Smaller, regional telcos and cable companies will likely bid on the hundreds of smaller, regional licenses in the other blocks.
How Can You Watch?
You can’t. Unlike the last spectrum auction, in which the FCC posted periodic updates about the bidding on the Web, this year’s auction will be a black box, more or less. The FCC will announce the bids for each licence at the end of each bidding round, but won’t name bidders. Once a round passes without any new bids, the auction ends. That could be a month from now, or later.
Will The Economy Affect The Bids?
It might: The bidders may have less to play with than they did six months ago. And even if they have the same war chest, they’re likely to be a bit more reluctant to make big bets. Stifel Nicolaus telecom analysts now say the risk “is certainly greater than before” that the reserve prices — which the FCC set during the flush days of last summer — won’t be met “for at least some licence blocks.” If that happens, the FCC could reprice the reserves, or loosen bureaucratic strings that come attached with some of the blocks, making them more attractive to the likes of Verizon.
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