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Verizon, AT&T win frequency bids

The two largest cellphone service providers in the US -- Verizon Wireless and AT&T -- won a greater swath of radio spectrum in the government auction that ended this week, heading off new competition that could have led to lower prices for consumers.

However, consumers can expect more choices in devices and services.

The US Federal Communications Commission, which held the auction that ended this week, said on Thursday that Verizon Wireless, a partnership of Verizon Communications and the Vodafone Group, bought the largest block. The company agreed to pay US$9.6 billion for 108 licenses. AT&T bought 227 licenses for US$6.6 billion.

The spectrum won in the auction by Verizon helps it catch up with AT&T, which is the nation's largest wireless carrier and which also has the largest portfolio of spectrum.

"Verizon wanted to come out of this auction narrowing the gap with AT&T and based on what they know, they have succeeded," said Blair Levin, an analyst with Stifel Nicolaus.

Google bid US$4.7 billion for a group of frequencies known as the C block, which can be used for nationwide wireless voice and data service, but it was outbid by Verizon.

Google, which has created an open-source operating system for cellphones called Android, agreed to bid in order to change the rules of the auction. It wanted the company that won the C block to open its network to devices and services from rival companies. Those rules will apply to Verizon. AT&T does not have to open its system, but has said it would anyway.

"Google is the happy loser," Levin said.

The auction raised US$19.12 billion for the US Treasury after more than seven weeks of secret bidding. That amount does not include a block for which bidding failed to meet the reserve price.

Perhaps the biggest surprise of the auction was that Dish Network, the satellite television company formerly known as Echostar Communications, bid US$711 million for 168 wireless licenses. Dish declined to say what it planned to do with the frequencies, citing government rules that restrict bidders from explaining their strategy until they make their down payments on their winning bids.

Analysts speculated that Dish was likely to offer some sort of video service. It could be a video-on-demand service to satellite TV customers or the company might provide a video service for mobile phones.

Qualcomm, which operates the MediaFlo service that delivers television to wireless handsets, bought US$558 million worth of spectrum in the auction.

The new spectrum uses frequencies in the 700-megahertz band, formerly used by UHF television stations. Signals at these frequencies penetrate buildings better than current cellular service.
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