AT&T and Verizon winners in the FCC’s airwave auction

AT&T and Verizon Communications, currently the number 1 and 2 wireless providers on the U.S. market, managed to get the biggest piece of the FCC auction for airwaves being vacated by television broadcasters (700 MHz). The $19.12 billion auction, which started on January 24, ended after 260 rounds of bidding. The 700MHz airwaves are seen as an attractive bite by wireless carriers (and not only, Google participated in the auction as well), because they can travel long distances and penetrate thick walls. These characteristics make the spectrum a perfect solution for wireless broadband service, hence the high interest.

Combined, Verizon and AT&T won more than $16 billion worth of licenses, which the carriers will use to enhance their wireless services and also offer new solutions to customers. As Rebecca Arbogast, an analyst with Stifel Nicolaus put it, "It means that the two big guys just got much bigger."

Verizon spent a total of $9.63 billion at the auction. The company managed to outbid Google and won the biggest nationwide block of spectrum. The $4.71 billion bid offered by the number one search site in the World was not enough, to compete with Verizon’s $4.74 billion. The company also won 25 regional licenses. Even though Google lost the battle, it achieved a victory, by requesting “open-platform" rules for the nationwide airwaves eventually won by Verizon. The open-platform requirements will enable consumers to use the mobile device of their choice with the services offered on the network.

In contrast, the other “Big dog” spent $6.64 billion and won 227 regional licenses around the United States. Those, in combination with the $2.5 billion acquisition of Aloha Partners (also a 700 MHz spectrum), which happened earlier this year, puts AT&T in a very stable market position. The statement of Ralph de la Vega, head of AT&T's wireless unit, proves how confident the company feels:"AT&T's strong spectrum holdings position the company to further enhance the quality and reliability of existing wireless broadband and voice services, and to set the foundation for new-generation wireless broadband technologies and services,"

As a result, Google shares went up 0.4 percent, Verizon shares closed 2.8 percent higher, and AT&T scored 2.2 percent.

source: Reuters