T-Mobile, Cable MSOs May Spend on Spectrum

Light Reading reports that the "upcoming spectrum auction is likely to garner multibillion-dollar bids from T-Mobile USA as well as from several non-traditional service providers, and could very well change the power balance in the wireless industry. The Federal Communications Commission (FCC) plans to start auctioning 90 MHz of "advanced wireless spectrum" in the 1.7GHz and 2.1GHz bands on June 29, in an auction known as Auction 66, covering the majority of the United States. Initial applications are due by May 10, and auction participants will not be able to discuss bids with each other, per a new anti-collusion rule."

According to a Lehman Brothers report, "non-traditional bidders acting alone, or in partnerships with current wireless service providers, will be active in part to change the negotiating dynamics with the national telecom service providers regarding net neutrality."

Lehman Brothers predicts "technology companies and cable operators will be bidders," but"declines to name any specific non-traditional bidders."

Speculation is that Google (Nasdaq: GOOG) or Microsoft Corp. (Nasdaq: MSFT) might bid. Tole Hart at Gartner noted that "the head of Time Warner Cable Inc. has said that they'd like to be a wireless operator."

The Lehman Brothers report wrote that "T-Mobile is in the weakest spectrum position of the four national players. Consequently, despite management's consistent talking point that 'it will be rational,' we expect T-Mobile to be an aggressive player in Auction 66." Lehman Brothers estimated that T-Mobile will spend as much as $6 billion

Gartner's Hart said, "Clearly T-Mobile is expected to be a large bidder. They'll need additional spectrum to roll out UMTS [universal mobile telecommunications system, one of the 3G successors to GSM]. How they do here in this auction will matter. If they can't roll out UMTS, then they might be an acquisition candidate at some point."

Lehman Brothers report predicted "Verizon may bid as much as $3 billion in order to stay competitive with other carriers." Lehman Brothers expected "Cingular at least to file for participation in the auction. Sprint Nextel, on the other hand, is not expected to be much of a participan."