As the bidders restlessly wait for the advanced wireless services auction to begin, the big question is whether TV interests-cable TV companies and satellite TV providers-are going to make a serious play for spectrum in this auction. The second $64 million question: How much will wireless carriers be willing to pony up to prevent these companies from invading their turf?
The wireless industry has spent the past few years whittling down competition through massive consolidation. Those efforts have allowed carriers to keep their prices stable and compete on more than just dollars.
Existing players will fight any move that brings more competition to the industry. Further, the fortunes of the nation’s two largest carriers, Cingular Wireless L.L.C. and Verizon Wireless, are tied to their landline telecom counterparts. And AT&T Inc. and Verizon Communications Inc. are spending heavily to build broadband fiber connections to offer cable TV and Internet access-and to compete with satellite and cable TV providers.
The bidder with the largest deposit in this auction is a combination of satellite TV providers EchoStar and DirecTV. The two companies, which are said to be contemplating a merger, lack a broadband component to their menu of services. Everyone wants a triple play, if not a quadruple play-video, Internet, voice and mobility. Adding wireless spectrum could give satellite operators wireless Internet access and VoIP technology that could be used for the voice component.
The bidder with the second-largest deposit is Sprint Nextel Corp. and its cable TV affiliates. The cable giants are no strangers to wireless auctions. Sprint teamed with Comcast, Cox and TCI in the 1995 PCS auction, paying $2.1 billion for clean spectrum in 29 markets. But then the cable vendors sold out their interest to Sprint in 1998.
It’s not going to be cheap for cable players to enter the auctions again. For its part, Sprint Nextel has a good spectrum position, what with Sprint’s legacy 1.9 GHz spectrum and Nextel’s legacy frequencies in the 800 MHz, 2.5 GHz and rebanding efforts that will provide it with clean 1.9 GHz spectrum. And the cable companies have already collectively committed $100 million to join with Sprint Nextel for the quadruple play. Is this consortium serious about acquiring more spectrum or will it just force its competitors to pay more for spectrum?
We’ll know the answer-and whether it’s business as usual or a new playing field-in a few months.
