Look Who's Bidding in Auction 73

The FCC's auction of wireless spectrum is swarming with participants, some of which you might not expect—including Chevron and Vulcan's Paul Allen

by Olga Kharif

U.S. government auctions of wireless spectrum always attract plenty of established telecoms as well as the usual contingent of speculators and telecom wannabes. The latest auction appears to be no exception: When the Federal Communications Commission announced potential participants on Dec. 18, the list included everyone from AT&T to Google (GOOG), long expected to enter the bidding. The big surprise? This time, the list of unexpected players, ranging from a venture backed by Microsoft co-founder Paul Allen to oil giant Chevron USA, appears to be longer than ever.

Some 266 organizations have announced their intention to participate in Auction 73, which will make available the last chunk of the most desirable airwaves for wireless services. While most potential participants—including entities backed by AT&T (T) and Verizon Wireless—still have to correct and beef up their applications to qualify for the auction, the crowd already appears far larger—by more than 70%—than expected, says Richard Doherty, director of consultancy Envisioneering Group. That has the potential to drive up auction prices. "When there was a land rush in the U.S., people who had no business there rushed in," he explains.

Complicated Connections

Due to limited information provided by the filings, many of the organizations listed are nearly impossible to trace to their owners, often turning out to be foreign-backed companies, investment funds, and law firms. Analysts caution that some of these pioneers may yet be disqualified from the auction: The FCC has strict rules governing foreign investment in U.S. airwaves, for one. As a result, entities backed by the existing national carriers, regional telcos like U.S. Cellular (USM), and well-known companies such as mobile TV provider Qualcomm (QCOM) and cable companies like Advance/Newhouse may end up winning this auction, as they have in the past. None of the companies that have filed are allowed to talk to the press for the duration of the auction, and thus could not comment for this story.

This time around, telcos may be bidding on their own and also backing other parties: Qualcomm has disclosed that it has a joint-bidding agreement with others. That could indicate the company's mobile TV business, MediaFlo, has accepted backing for this auction from an investor—a customer like AT&T or Verizon Wireless.

All eyes are also on Dish Network (DISH), participating in the auction under the name Frontier Wireless. Dish has been rumored to be in merger talks with fellow participant AT&T, but auction rules prohibit any discussions among bidders for the duration of the auction, which could last until late spring. While EchoStar had filed to participate in a previous wireless auction, a year ago, it withdrew partway through, likely because it felt the bidding went too high. As prices in Auction 73 are expected to be even steeper, EchoStar may have trouble getting the funding to buy a chunk of the wireless spectrum that would allow it to provide the wireless service it needs to better compete with telcos and cable companies.