Satellite and Cable Companies Battle Wireless in FCC Auction

By Jeremy Pelofsky

U.S. wireless carriers battled with satellite and cable operators on Wednesday for valuable licenses for advanced wireless services -- like high-speed Internet access -- on the first day of an auction that so far has raised $933.5 million.

A partnership of the top two satellite television providers, EchoStar Communications Corp. and DirecTV Group Inc., led the Federal Communications Commission sale with top bids for 13 licenses totaling $282.5 million.

After the day's second round of bidding, the group knocked No. 4 U.S. wireless carrier T-Mobile USA out of the first place spot it had after the initial round. T-Mobile has the highest bids for 23 licenses, totaling $121.7 million.

T-Mobile, a unit of Germany's Deutsche Telekom AG, does not have as many wireless airwaves as the bigger U.S. carriers and analysts have expected the company to bid aggressively.

Analysts have predicted the Federal Communications Commission sale could raise as much as $15 billion and would last several weeks. The sale includes 1,122 licenses and the bidding will resume on Thursday and continue until there are no new bids or other activity in the sale.

Telephone, cable and satellite companies are competing to offer consumers a bundle of voice, Internet, wireless and television services and some see acquiring the airwaves in the FCC auction as aiding their efforts.

The cable and satellite companies have not said publicly what they would do with the wireless licenses if they won them. However, analysts have suggested satellite firms would use the airwaves for high-speed Internet access while cable operators could use them for voice communications.

A consortium of big cable operators was in third place, with the top bids for four licenses with offers of $106.9 million. They have joined forces with No. 3 wireless carrier Sprint Nextel Corp. in bidding during the auction.

That group includes the biggest cable operators, Comcast Corp., Time Warner Inc., and Cox Communications.

Two smaller licenses covering the New York City and Newark, New Jersey, area received high individual bids from Dolan Family Holdings LLC, which has ties to Cablevision Systems Corp. Chairman Charles Dolan.

Dolan bid almost $25 million for one and $19.4 million for the other, according to FCC data.

Among larger regional licenses being offered, the one receiving the highest bid covered a swath of territory that stretches across the northern United States, including Chicago, Detroit, Minneapolis and Cleveland. The satellite television group bid $69.1 million for this license.

Copyright 2006 Reuters Limited.

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