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US telcos scramble for spectrum

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An FCC auction of spectrum suitable for mobile phone services has brought in over $1.3bn in bids. That's much less than the scramble in 2001 when bids totalled $16.8bn, but enough to make the major players pull out the stops.

Verizon, Cingular and T-Mobile and the budget metropolitan CDMA carrier MetroPCS were among the players in the FCC's Auction 58. MetroPCS, which operates in five markets including the Bay Area, Miami and Georgia, has tabled bids of $384m, and is eyeing spectrum in Los Angeles and Houston. Sprint was disqualified, because it didn't lodge a deposit up front.

Due to the arcane nature of the auction rules (and things were much wackier in the 1980s, when you could basically call yourself a telco and then bid for spectrum) holding companies or proxies are used to make the actual bids. So for example Cook Ilet, which has made 34 bids totalling $283m, is 85 per cent owned by T-Mobile.

The auction is already into its ninth round, and the figures may change by the time you read this.

Now, as in 2001, much of the spectrum was previously held by NextWave, the bankrupt carrier which agreed to pay $4.7bn for licenses in 1996 but couldn't pay for it when it folded two years later. The FCC revoked the license, and NextWave took its appeal to the US Supreme Court, where it won 8:1.

NextWave sold some of this spectrum in private auctions last year, with Verizon snapping up much of what was on offer. ®

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