DirecTV and EchoStar exit spectrum auction

August 21, 2006

The fierce competitors who became partners in the FCC’s spectrum auction are back to being competitors again. Armed with a pool of $972.5 million, DirecTV, EchoStar and Liberty Media began the auction on Aug. 9 in a partnership that placed them among the most deep-pocketed of the bidders.

But after little more than a week, with the prices soaring, they pulled out of the bidding to acquire 1,122 licenses for wireless spectrums. No public reason was given for the exit, but analysts speculated that the numbers had gone too high.

The government raised more than $10.2 billion after 20 rounds, and predictions were late last week that the sale could eventually raise as much as $15 billion. The auction ends when there are no new bids, withdrawals or other activity.

Among the top bidders by week’s end were T-Mobile, Cingular Wireless and Verizon Wireless — all mobile phone and data carriers. It is expected that the auction will continue for several weeks.

This is one of a pair of FCC auctions considered the last best chance for media companies to acquire premium spectrum for wireless phone and Internet services. The second major auction, which involves analog spectrums now used by television broadcasters, is set to begin at the end of January 2008.

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