Original URL: https://www.theregister.com/2006/09/18/aws_auction_nears_end/
MetroPCS and Leap worry cellco giants as AWS auction ends
Range wars
Posted in Networks, 18th September 2006 17:21 GMT
The US auction of AWS (Advanced Wireless Services) spectrum in the 1.7GHz and 2.1GHz bands has at last drawn to a close, raising $13.9bn for the government in the sale of the largest block of spectrum (1,112 licenses) offered by the FCC regulator.
As had become clear in the later rounds, the main winners are T-Mobile, the Sprint-cable partnership, the other major cellcos and two regional operators, MetroPCS and Leap. While the Sprint-cable plans for national quad play services spell the greatest medium term threat to the big two cellcos, Cingular and Verizon Wireless, in the immediate future they may be more stressed by the progress of flat rate carriers MetroPCS and Leap, which will now be positioned to undercut the incumbents' rates in every major US city, exerting more pressure on the giants' already squeezed margins.
In the 141st round, just four new bids were cast (the auction ends when no further bids are submitted, so does not have a fixed end point). At this point, net bids totalled $13.7bn and TMobile topped the table with 119 licenses provisionally snapped up, for a total of $4.2bn.
Sprint Nextel and its cable partners - Comcast, Time Warner Cable, Cox and Advance/ Newhouse - had high bids on 137 licenses for $2.4bn. The needs of these two players are starkly different - T-Mobile had to acquire a decent chunk of spectrum to have any chance of entering the 3G market in force and closing the gap with the other national cellcos, Cingular, Verizon Wireless and Sprint itself.
Sprint, by contrast, has almost a surfeit of spectrum, with an average of 100MHz across the country in 2.5GHz plus its existing CDMA and iDEN capacity, but feels it needs more in order to support a hugely ambitious multimedia, wireless quadruple play roadmap that will, it hopes, put both its own brand and its cable partners ahead of the major telcos and satellite players in next generation converged services.
Other big winners are the other major cellcos - Cingular, Verizon and T-Mobile stand to win 60 per cent of the new licenses between them, with Verizon spending an estimated $2.8bn and Cingular $1.3bn - and two regional players, MetroPCS and Leap Wireless, both of which target lower income consumer groups with flat rate calling plans.
So far, MetroPCS has spent at least $1.4bn on new spectrum and will be able to expand its services into Las Vegas and New York, among other areas; and Leap has totalled $710m in bids, winning licenses in Milwaukee, New Orleans, Minneapolis, Philadelphia and Washington DC.
This will mean increased competition for the big three mobile operators, which will now face at least one low cost rival, ether MetroPCS or Leap, in every major market across the US.
Copyright © 2006, Wireless Watch
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Related link
FCC press release (pdf)