Bidding slowed last week in the advanced wireless services spectrum auction, but the competition could be far from wrapping up as companies could bid up prices for competitors and make a few last attempts to capture always valuable spectrum.
T-Mobile USA Inc. will almost certainly walk away from the auction as the highest bidder; the company has placed high bids of nearly $4.2 billion on spectrum at the end of last week. In many markets, T-Mobile USA has doubled or even tripled the amount of spectrum that it held prior to the auction—which will give the carrier plenty of room to launch 3G services.
T-Mobile USA has said in the past that it plans to begin launching 3G services late this year or early next year—but that was before the auction was delayed to August. Ovum analyst Roger Entner said he thinks the fourth-largest U.S. carrier is likely to choose HSDPA for its network technology, since the choice would be more likely to foster international roaming ability.
T-Mobile International’s U.K. subsidiary launched an HSDPA network in June, but also uses pre-standard WiMAX technology to provide wireless broadband on trains in the United Kingdom.
Companies such as Cingular Wireless L.L.C. and Verizon Wireless, which already have significant spectrum holdings, probably aren’t going to rush things, analysts said. Cingular is already in the process of expanding the coverage of its new HSDPA high-speed data network, and Verizon Wireless currently has extensive CDMA2000 1x EV-DO Rev. 0 coverage and has announced plans to roll out Rev. A upgrades next year.
“I don’t think Verizon has to do anything right now, quickly,” Entner said. “For them, it’s more like padding, and they might buy some more spectrum in the after-market to run things out a little more before they build something in it.
“Verizon’s not in a rush,” he added. “T-Mobile is in a rush.”
Verizon Wireless got back into the auction action last week after several dozen rounds without adding to its spectrum holdings. The carrier went after spectrum in Hawaii and pushed up the bidding on several licenses in Louisiana that had been held by the Sprint Nextel Corp. joint venture with several cable companies.
“We could see more of that,” said Jim Wiesenberg, principal of spectrum consulting company WW Associates. “Why shouldn’t they jawbone up the prices of their largest long-term competitor, which is cable, that’s now entering the wireless field for the first time?”
For the myriad of smaller companies that have acquired licenses in this auction, Wiesenberg said, their choices post-auction “largely depend on how far they are into wireless. If they’re a virgin, they can get pregnant by either voice or data. … Otherwise, if it’s a company like Dobson [Communications Corp.] getting a second license in its current areas, presumably it will move from predominantly voice into data.”
For example, LL License Holdings II L.L.C. (backed by Long Lines Wireless, a telecom company that serves parts of Iowa, Nebraska and South Dakota), and designated-entity KTC AWS Ltd. are dueling over two licenses in South Dakota. Long Lines acquired two small Iowa carriers late last year and has said that it plans to expand GSM wireless coverage to rural areas that national carriers generally overlook. KTC currently holds high bids on nine licenses for $1.5 million, all of which are in South Dakota. LL License Holdings also holds high bids on nine licenses, having bid about $4.2 million for spectrum in Minnesota, North Dakota, Iowa and Nebraska.
While prices per-megahertz-per-pop reached as high as $1.57, that has hardly been the norm. Fewer than 100 licenses have garnered high bids for more than 50 cents per-megahertz-per-pop, according to Wiesenberg.
The number of new bids per round dropped below 20 last Friday, although the auction is not scheduled to end until all companies cease bidding.
“Even though the number of bids is down, it doesn’t mean it’s over,” Wiesenberg added. “The fat lady is still in the wings. The warm-up acts are still performing.”
