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Wednesday, August 09, 2006

Implications of Today's FCC Spectrum Auction

Stock Tickers: DTC, DISH, VZ, T, DT, S, CMCSA, TWX, INTC, MOT, LEAP, AMT, CCI, SBAC

During earnings season it is easy to not get around to otherwise important events. After reviewing some government auctions over Spectrum that will occur at the FCC today, something is becoming quite clear. In wireless, the price of playing the game is going up, up and away. The combined bidders are expected tgo pay somewhere in the vicinity of $15 Billion for licenses of 90 megahertz of spectrum at 1710-1755 and 2110-2155 MHz.

This is said by outsiders to be enough spectrum to create about two new Verizon's, if you can imagine it. Is that true? It seems like a stretch, but $15 Billion being paid to a government agency will have to go a long way to justify this. There were 168 qualified bidders for this auction according to the FCC.

The reason the prices for spectrum are going higher is because we are truly in what is the midst or real covergence. It is becoming evident that wireless WILL be the additional model for any provider, even after a threefold failure from the 90's to present day. This is even pulling satellite and cable companies into the fray. It is also the spectrum that converges high-speed Internet, television, and telephony with a greater signal that can pass through walls and a signal that can physically (or is it virtually) travel a further distance.

Below are just some of the companies bidding, and you would be shocked to see how many competitors have banded together so that the spectrum auctions wouldn't hit them too hard.

DirecTV (DTV) and Echostar (DISH);
Comcast (CMCSA), Time Warner (TWX), Sprint NexTel (S);
T-Mobile (DT);
Cingular (part of T) and Verizon.

Even companies like Leap Wireless (LEAP) are involved. You can probably bet that McCaw's Clearwire that just pulled its IPO after Intel (INTC) and Motorola (MOT) gave it vast funding is in the bidding, although they are not listed in the depository group of bidders (see below).

What is pretty easy to see is that, regardless of the formal auction winners, one group that stands to benefit from this the most is the traditional cellular tower operating companies. You know, the ugly communications metal monstrosities you see every three to five miles on the highways and all over your city. The main tower companies are American Tower (AMT), Crown Castle (CCI), and SBA Communications (SBAC).

This auction may run through September, so today may not be the end of it all. Regardless of who really wins the various spectrum auctions for whatever price they have to pay, the real winners are going to be you and me.

If the total sum of the auction up-front payments below is accurate, it looks like the deposits alone were over $4.2 Billion.

Jon C. Ogg
August 9, 2006


A list of companies that made up-front payments for this auction is below:


Bidder Name Upfront Payment Maximum Eligibility
(Bidding Units)
18th Street Spectrum, LLC $750,000.00 750,000
3 Rivers Telephone Cooperative, Inc. $821,000.00 821,000
ACS Wireless License Sub, Inc. $304,000.00 304,000
Advanced Communications Technology, Inc. $264,000.00 264,000
AGRI-VALLEY COMMUNICATIONS, INC. $2,037,000.00 2,037,000
Alenco Communications, Inc. $325,000.00 325,000
Allcom Communications, Inc. $368,000.00 368,000
American Cellular Corporation $17,000,000.00 17,000,000
Antares Holdings, LLC $21,000,000.00 21,000,000
Arapahoe Telephone Company d/b/a ATC Communication $136,000.00 136,000
AST Telecom, LLC $34,000.00 34,000
Atlantic Seawinds Communications, LLC $233,000.00 233,000
Atlantic Wireless, L.P. $52,000,000.00 52,000,000
AWS Wireless Inc. $142,830,000.00 142,830,000
Aztech Communications, Inc. $93,000.00 93,000
Barat Wireless, L.P. $80,000,000.00 80,000,000
Beehive Telephone Company, Inc. $17,000.00 17,000
BEK COMMUNICATIONS COOPERATIVE $196,000.00 196,000
Bend Cable Communications, LLC $176,000.00 176,000
Big Bend Telecom, LTD $34,000.00 34,000
Big River Telephone Company, LLC $250,000.00 250,000
Blackfoot Telephone Cooperative, Inc. $782,100.00 782,100
Blue Valley Tele-Communications, Inc. $109,000.00 109,000
Bluestreak Wireless LLC $1,000,000.00 1,000,000
BPS Telephone Company $192,000.00 192,000
Breda Telephone Corp. $33,000.00 33,000
C&W Enterprises INC. $141,000.00 141,000
Cable One, Inc. $3,531,000.00 3,531,000
Cal-Ore Telephone Co. $500,000.00 500,000
Carolina Personal Communications, Inc. $286,000.00 286,000
Carolina West Wireless, Inc. $6,000,000.00 6,000,000
Cavalier Wireless, LLC $18,800,000.00 18,800,000
CCTN BIDDING CONSORTIUM $140,100.00 140,100
Cellco Partnership d/b/a Verizon Wireless $383,343,000.00 255,562,000
Cellular South Licenses, Inc. $7,000,000.00 7,000,000
Centennial Michiana License Company LLC $5,000,000.00 5,000,000
Central Texas Telephone Investments, LP $2,567,000.00 2,567,000
Central Utah Telephone Company $500,000.00 500,000
CenturyTel Broadband Wireless LLC $59,098,000.00 59,098,000
Chariton Valley Communication Corporation, Inc. $131,000.00 131,000
Chequamegon Communications Cooperative, Inc. $1,281,700.00 1,281,700
Chester Telephone Company $103,000.00 103,000
Churchill County Telephone d/b/a CC Communications $60,000.00 60,000
Cincinnati Bell Wireless LLC $7,000,000.00 7,000,000
Cingular AWS, LLC $500,000,000.00 333,333,334
City of Ketchikan dba Ketchikan Public Utilities $44,000.00 44,000
Clay County Rural Telephone Cooperative, Inc. $80,000.00 76,000
Clinker LLC $20,000.00 20,000
Coleman County Telecommunications, LTD $116,000.00 116,000
Command Connect, LLC $3,300,000.00 3,300,000
Comporium Wireless, LLC $673,000.00 673,000
Craw-Kan Telephone Cooperative, Inc. $434,000.00 434,000
Cricket Licensee (Reauction), Inc. $255,000,000.00 255,000,000
CROSS TELEPHONE COMPANY $1,049,000.00 1,049,000
CTC Telcom, Inc. $220,000.00 220,000
Dakota Wireless Group, LLC $100,000.00 100,000
Daredevil Communications LLC $8,888,000.00 8,888,000
Denali Spectrum License, LLC $50,000,000.00 50,000,000
Diller Telephone Company $101,000.00 101,000
Dolan Family Holdings, LLC $149,983,000.00 149,983,000
Ellijay Telephone Company $154,000.00 154,000
ETCOM, LLC $81,000.00 81,000
Farmers Mutual Telephone Company $43,000.00 43,000
Farmers Telecommunications Cooperative, Inc. $85,000.00 85,000
Fidelity Communications Company $900,000.00 900,000
FMTC Wireless, Inc. $325,000.00 325,000
FTC Management Group, Inc. $243,000.00 243,000
Graceba Total Communications, Inc. $138,000.00 138,000
Grand River Communications, Inc. $103,000.00 103,000
Granite State Long Distance, Inc. $381,000.00 381,000
Green Hills Area Cellular Telephone, Inc. $43,000.00 43,000
Hancock Rural Telephone Corporation $400,000.00 384,000
Hawaiian Telcom Communications, Inc. $2,155,000.00 2,155,000
Heart of Iowa Communications Cooperative $175,000.00 163,000
Hemingford Cooperative Telephone Company $750,000.00 750,000
Hill Country Telephone Cooperative, Inc. $254,000.00 254,000
Horry Telephone Cooperative, Inc. $1,012,800.00 1,012,800
Innovative Communication Corporation $97,500.00 65,000
Iowa Intelegra Consortium, LLC $2,000,000.00 2,000,000
Iowa Telecommunications Services, Inc. $3,102,000.00 3,102,000
James Valley $75,000.00 75,000
Jefferson Telephone Company $150,000.00 150,000
Kingdom Telephone Company $300,000.00 300,000
KTC AWS Limited Partnership $700,000.00 678,000
La Ward Cellular Telephone Company, Inc. $84,000.00 84,000
LCDW Wireless Limited Partnership $150,000.00 144,000
Leaco Rural Telephone Cooperative Inc $712,500.00 475,000
Ligtel Communications, Inc. $300,000.00 296,000
LL License Holdings II, LLC $2,500,000.00 2,500,000
Lynch AWS Corporation $1,500,000.00 1,500,000
MAC Wireless, LLC $160,000.00 154,000
Manti Telephone Company $563,000.00 563,000
McDonald County Telephone Company $67,000.00 67,000
Mediapolis Telephone Company $250,000.00 250,000
MetroPCS AWS, LLC $200,000,000.00 200,000,000
Midwest AWS Limited Partnership $128,000.00 128,000
Mt. Vernon. Net, Inc. $291,000.00 291,000
MTA Communications, Inc. $1,220,000.00 1,220,000
MTPCS License Co., LLC $2,000,000.00 2,000,000
MUENSTER TELEPHONE CORPORATION OF TEXAS $55,000.00 55,000
Mutual Telephone Company $370,000.00 364,000
NEIT Wireless, LLC $475,000.00 475,000
North Dakota Network Company $581,000.00 581,000
Northeast Missouri Rural Telephone Company $55,000.00 55,000
Northeast Nebraska Telephone Company $302,000.00 302,000
Northern Iowa Communications Partners, LLC $200,000.00 200,000
Northwest Missouri Cellular Limited Partnership $128,000.00 128,000
NSIGHTTEL WIRELESS, LLC $1,800,000.00 1,800,000
NTELOS Inc. $2,660,000.00 2,660,000
Palmetto Rural Telephone Cooperative, Inc. $1,242,000.00 1,242,000
Panhandle Telecommunication Systems, Inc. $17,000.00 17,000
Panora Telecommunications, Inc. $33,000.00 33,000
Partnership Wireless LLC $158,000.00 158,000
Paul Bunyan Rural Telephone Cooperative $620,000.00 620,000
PCS Partners, L.P. $3,000,000.00 3,000,000
Perry-Spencer Rural Telephone Coop., Inc. dba PSC $136,000.00 136,000
PetroCom License Corporation $60,000.00 60,000
Pine Cellular Phones, Inc. $226,000.00 226,000
Plains Cooperative Telephone Association, Inc. $64,000.00 64,000
Plateau Telecommunications, Inc. $3,000,000.00 3,000,000
Public Service Wireless Services, Inc. $4,501,000.00 4,501,000
Rainbow Telecommunications Association, Inc. $70,000.00 70,000
Red Rock Spectrum Holdings, LLC $6,000,000.00 6,000,000
Reservation Telephone Cooperative, Inc. $37,000.00 37,000
Roberts County Telephone Cooperative Association $61,500.00 41,000
Rodriguez, Marcos $195,000.00 195,000
Ropir Communications, Inc. $118,000.00 118,000
Route 66 Wireless, LLC $500,000.00 500,000
SALINA SPAVINAW TELEPHONE COMPANY, INC. $125,000.00 125,000
Sandhill Communications, LLC $133,000.00 133,000
Shenandoah Mobile Company $4,749,000.00 4,749,000
Shoreline Investments LLC $173,000.00 173,000
SKT, Inc. $814,000.00 814,000
Smithville Spectrum, LLC $425,000.00 416,000
South #5 RSA Limited Partnership d/b/a Brazos Cell $103,000.00 103,000
South Slope Cooperative Telephone Company, Inc. $350,000.00 303,000
Southeastern Indiana Rural Telephone Coop., Inc. $242,400.00 242,400
Space Data Spectrum Holdings, LLC $520,000.00 520,000
SpectrumCo LLC $637,709,000.00 637,709,000
Spotlight Media Corp $1,149,000.00 1,149,000
St. Cloud Wireless Holdings, LLC $630,000.00 630,000
Stayton Cooperative Telephone Company $658,000.00 658,000
T-Mobile License LLC $583,518,750.00 583,518,750
Telephone Electronics Coporation $1,338,000.00 1,338,000
The Chillicothe Telephone Company $359,000.00 359,000
The Pioneer Telephone Association, Inc. $134,000.00 134,000
The S&T Telephone Cooperative Association, Inc. $28,000.00 28,000
The Tri-County Telephone Association, Inc. $116,000.00 116,000
Three River Telco $88,000.00 88,000
Tri-Valley Communications, LLC $249,000.00 249,000
Triad AWS, Inc. $40,000,000.00 40,000,000
Union Telephone Company $800,000.00 800,000
UNITED TELEPHONE MUTUAL AID CORPORATION $35,000.00 35,000
UNITED WIRELESS COMMUNICATIONS INC. $130,000.00 130,000
Van Buren Wireless, Inc. $160,000.00 147,000
Vermont Telephone Company, Inc. $563,000.00 563,000
Volcano Internet Provider $89,000.00 89,000
West Carolina Piedmont Bidding Consortium $380,400.00 380,400
WEST CENTRAL COMMUNICATIONS, LLC $536,000.00 536,000
West Central Telephone Association $310,000.00 294,000
Western New Mexico Telephone Company, Inc. $500,000.00 500,000
Wheat State Telephone, Inc. $141,000.00 141,000
Wireless DBS LLC $972,546,000.00 648,364,000
Wittenberg Telephone Company $855,000.00 855,000
WUE INC $8,000.00 8,000
WWW BROADBAND, LLC $157,000.00 157,000
XIT Leasing, Inc. $210,000.00 210,000
XIT Telecommunication & Technology, Ltd. $33,000.00 33,000
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