Broadband bundles to drive wireless spectrum sale

Cable and satellite companies will be among the bidders at a major FCC auction, as they look to add wireless to their package of services.

A government auction that begins Wednesday could bring everyone from cable companies to satellite television providers to the wireless world.

The so-called quadruple-play service package--which would add wireless voice and data services to an existing bundle of high-speed Internet access, telephony and television--is driving interest in the Federal Communications Commission's biggest spectrum auction in a decade, as cable operators and satellite operators vie for a piece of the action along with big names like T-Mobile.

The auction, which had been delayed several times, could run through September. The sale of the 1,122 licenses, now being used by the military and law enforcement, is expected to raise about $15 billion. The licenses will cover 90 megahertz of spectrum at 1710-1755 and 2110-2155 MHz.

While traditional wireless operators, such as T-Mobile, are expected to bid aggressively, a slew of nontraditional wireless players, such as cable operators and satellite TV providers, are also throwing their hats into the ring in an effort to bolster their service packages to compete against big phone companies, namely Verizon Communications and AT&T.

Satellite providers DirecTV and EchoStar are teaming up under the name Wireless DBS to put down $972.5 million in bids for spectrum. Cable operators Comcast, Cox Communications and Time Warner have joined forces with Sprint Nextel to form a group called SpectrumCo that is bidding $637.7 million for licenses.

Cingular Wireless and Verizon Wireless, which already have plenty of spectrum, have also made separate deposits to bid on the spectrum, according to public documents filed with the FCC. These companies are likely bidding to ensure that others don't get the spectrum too cheaply, some analysts say.

Acquiring spectrum and adding wireless services is crucial for satellite and cable operators trying to compete with phone companies. Phone companies are already starting to offer a package of services that includes telephony, broadband and now television service. What's more, Verizon and AT&T both own large stakes in wireless phone companies. And it's very likely these companies will soon begin bundling that wireless service into their offering as well.

"We are seeing the advent of wireless broadband services," said Amy Lind, an analyst with IDC. "And wireless is something that neither cable operators nor satellite companies have right now. Adding wireless will allow them to expand their offerings."

Cable operators, which have effectively used their own bundles to win new customers, see wireless as an important opportunity. Companies such as Comcast and Time Warner have proven that the more services they can offer as part of a bundle, the more leverage they have to compete on pricing. Instead of slashing prices on individual services, they can market the value of the entire package.

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