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Bidders Beware

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Spectrum auctions are a dark smudge in America's telecom history book. The intention of such auctions traditionally has been--at least in part--to sell newly available patches of frequency to an up-and-coming crop of new players that will bring about greater competition and customer choice, and potentially new kinds of service.

The intention of the Advanced Wireless Services auction, with a total of $13 billion bid so far, was no different. Earlier this year, the industry was rife with speculation about which companies would bid for licenses and who could be the newest wireless entrants.

At various times, people have wondered aloud if the bidders could include Apple Computer, a major movie studio, a major music label, a company from the online social networking realm, or major cable TV and satellite companies. For the record, out of all those possibilities, only the cable and satellite guys actually entered the auction, and the satellite industry players, DirecTV and Echostar, bowed out last week as bids for licenses headed well into the billion-dollar territory.

To look at the leader board for the AWS auction is to see a list of the largest existing mobile carriers--T-Mobile leads the proceedings with more than $4 billion bid, and Verizon Wireless and Cingular also are among the top four bidders. The remaining member of the top four is SpectrumCo, which is backed by Sprint and its cable TV partners, and that's the closest thing there is to new competition in this auction for large-coverage regional wireless licenses.

Where did all the exciting, new upstarts go? Perhaps they knew the traditional mobile carriers would dominate the auction and weren't willing or weren't capable of out-bidding these players. As the satellite player found out, the U.S. mobile market remains a four-horse race that no one else has any hope of entering.

There appears to be no fix for the federal auction system in the U.S., as past auction debacles and warnings of how only the big companies can make a go of it have led to little more than meaningless delays in the action. But if you were the Federal Communications Commission and had just raised $13 billion, would you complain?

E-mail me at doshea@telephonyonline.com.

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