T-Mobile tops airwave auction

Bellevue-based T-Mobile USA, Verizon Wireless and a partnership of cable companies were the highest bidders in a U.S. government sale of airwaves that raised $13.9 billion.

T-Mobile, the fourth-biggest U.S. mobile-phone carrier, spent $4.18 billion for 120 licenses that will let it sell Internet services already offered by larger rivals.

Cable companies joined with Sprint Nextel to buy enough licenses to create a new national network.

The airwaves give T-Mobile, owned by Germany's Deutsche Telekom, a chance to gain ground on Cingular Wireless, Verizon Wireless and Sprint Nextel, the nation's three biggest mobile-phone companies.

T-Mobile won licenses covering large portions of the West, Northeast, Southeast and Midwest, including cities such as New York and Chicago.

"T-Mobile was clearly the most direly in need of spectrum and they seem to have achieved their mission," Charles Golvin, a Los Angeles-based analyst for Forrester Research Inc., said before the auction closed.

T-Mobile USA probably added 710,000 customers in the second quarter, the median estimate of 10 analysts surveyed. Verizon added 1.82 million, and Cingular signed up 1.5 million new users in the period.

Verizon, the second-largest U.S. wireless company, spent $2.8 billion for 13 licenses covering regions including the Northeast, Southeast and Great Lakes.

The sale, which began Aug. 9, ended Monday, the Federal Communications Commission (FCC) said.

The auction of 1,122 licenses will be the FCC's highest-grossing sale if winning bidders make the required payments. Total bids fell short of the $15 billion projected by the Congressional Budget Office. Proceeds will be deposited in the U.S. Treasury.

The sale was the "biggest, most successful auction in the commission's history" and included "the largest amount of spectrum suitable for wireless broadband ever offered in a single FCC auction," FCC Chairman Kevin Martin said Monday in an e-mailed statement.

"It's pretty close to what the government wanted and expected," Rudy Baca, a partner at Rini Coran, a Washington, D.C.-based law firm specializing in telecommunications, said before the auction closed.

Auction participants have declined to comment on their plans for the licenses they won, citing FCC rules.

Bidder SpectrumCo includes the cable companies Comcast and Time Warner, which are widely expected to build a wireless network to complement their video, phone and Internet services.

"They can be a one-stop shop," Baca said.

The auction was a relatively cheap way to acquire spectrum, Baca said. Bidders paid about a third of the average price that previous auctions garnered for the U.S. Treasury.

The next major spectrum auction will be to sell off licenses to spectrum held by broadcast television stations, which are moving to a different frequency because of digital broadcasting.

No specific date has been set, but Congress requires it to begin by Jan. 28, 2008.

Information on the broadcast television auction was provided by The Associated Press.