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Directv dish pull out

Wireless DBS LLC, a joint venture of satellite TV providers DirecTV Group and EchoStar Communications, pulled out on Wednesday from the Federal Communications Commission auction for licenses to deliver advanced wireless services.



Securing a $972.5 million war chest, Wireless DBS emerged as the top bidder when the auction began last August 9 by offering $282.5 million for 13 licenses. But early this week, as the bidding war progressed, Wireless DBS began scaling back its bids and withdrew altogether.



T-Mobile now leads the auction, putting $3.04 billion on the line, after 20 rounds of bidding. FCC said its spectrum auction has hit $10.27 billion in total bids, still within the $8 billion to $15 billion range that industry observers had predicted.



Deutsche Telekom's T-Mobile, the fourth-largest U.S. wireless carrier, has put up the most money to date, in an effort to add a next-generation data network to its list of services.



FCC said 168 companies were qualified to bid in the auction of Advanced Wireless Services licenses in the 1710-1755 MHz and 2110-2155 MHz bands. Under the bidding rules, the auction for the spectrum will continue until no more bids are submitted, which means it could last several weeks. Since the FCC is actually parceling off 1,122 individual licenses, the auction has a series of different leaders--a list that changes hour to hour as the FCC reports its latest results.



But after one week, many observers believe the price of the licenses has gone too steep for satellite and mobile companies to make money.



Telecom, Media and Finance Associates, Inc. (TMF Associates) consulting firm predicted that the exit of Wireless DBS LLC (a partnership of DirecTV and Echostar) from the FCC's ongoing AWS spectrum auction will refocus attention on alternative spectrum bands, and particularly on the spectrum allocated to Mobile Satellite Services (MSS) operators.



In recent years, the FCC has moved to permit use of MSS spectrum for integrated satellite-terrestrial services. Deployment of terrestrial base stations, known as Ancillary Terrestrial Components or ATC, will enable MSS operators to provide service in urban areas and inside buildings which satellite signals are too weak to penetrate. This will provide a workable alternative option for deployment of a new national wireless network.



Tim Farrar, author of a recent report on ATC and MSS, said MSS operators will need to secure major partners in order to fund the US$3B+ projected cost of terrestrial base station deployment and to secure adequate mass-market distribution channels.



“We have maintained that the optimum partner for MSS operators would be a satellite TV operator such as DirecTV or Echostar, because of their compelling need to develop new wireless and broadband service offerings, and the shortage of alternative spectrum options for deploying a nationwide wireless network. Such a partnership could generate as much as US$5.3B in annual service revenues by 2015,” he said.



He predicted that the exit of Wireless DBS from the AWS auction means that DirecTV and Echostar will now have to focus on alternative sources of spectrum. “They could opt for a partnership with either Craig McCaw's Clearwire, which operates in the 2.5GHz band, or with one or more MSS operators. Although Clearwire's network is already operational, the national footprint of MSS operators may prove a decisive advantage in the long term,” he said.
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