After more than three weeks of bidding, Deutsche Telekom‘s T-Mobile, the fourth-largest U.S. cellular carrier, continues to have placed the biggest bet at the Federal Communications Commission’s wireless spectrum auction. T-Mobile has pledged $4.2 billion so far, while total bids from all parties have reached $13.7 billion. Initial estimates suggested the federal government may eventually bring in $15 billion for its airwave auction.
Both established wireless carriers–such as the nation’s largest, Cingular Wireless–and other bidders–like SpectrumCo, a coalition of the largest U.S. cable TV providers and Sprint Nextel (nyse: S – news – people )–are trying to buy 1,122 airspace licenses that would allow them to add new voice and data services or increase existing coverage areas. Faster data networks are favored by both e-mail-addicted businessmen and ringtone-crazy high school students. Still, data service only accounts for about 10% of today’s wireless bills.
No surprises here yet: Established carriers represent much of the leaderboard. Verizon Wireless, a joint venture of Verizon Communications (nyse: VZ – news – people ) and Vodafone (nyse: VOD – news – people ), is second with $2.8 billion in bids. SpectrumCo, representing Comcast (nasdaq: CMCSA – news – people ), Time Warner‘s (nyse: TWX – news – people ) cable division, Cox Communications, Bright House and Sprint, is third, bidding $2.3 billion. Dallas-based regional carrier MetroPCS has $1.4 billion on the line for licenses covering the Northeast, Midwest and some Western states. And Cingular, owned by the merging AT&T (nyse: T – news – people ) and BellSouth (nyse: BLS – news – people ), rounds out the top five bidders with a $1.3 billion stake.
The FCC sped up the auction process this week, increasing the daily number of bidding rounds to six 30-minute sessions per day, up from four hour-long sessions. Most of the largest chunks of spectrum haven’t seen new bids in weeks. Verizon Wireless’ $1.3 billion bid for a slice of spectrum in the Northeast is the single largest bid. The second-largest single bid is a $894 million commitment from T-Mobile for a swath of airspace over the Western U.S.
In a note issued Thursday, Citigroup analyst Michael Rollins wrote that recent bidding activity could lead to increasing competition in urban markets, thank to carriers such as Leap Wireless and MetroPCS bidding on licenses that include several larger cities. Rollins also says greater spectrum buys from big, national carriers could also be a sign of more aggressive data network installations in urban markets. “Verizon is also actively bidding on urban spectrum, and is looking to build a larger spectrum position than we had previously anticipated,” he adds.
On Aug. 8, Sprint, already rich with spectrum after its merger with Nextel, announced plans for a nationwide “fourth-generation” data network, while most carriers (including Sprint and Verizon) are still putting finishing touches on third-gen networks (see: ” Sprint Boss Goes Next-Gen”).
While the current auction could still last a few more weeks, with bidding mostly on smaller, cheaper licenses, unsuccessful bidders need not fret: Another FCC auction, with 64 more wireless spectrum licenses, is scheduled to start Feb. 7, 2007. Winning bidders could use the spectrum for a range of services including wireless Internet or mobile voice and paging services.