IP Democracy: DBS Players Back Away from Spectrum Bidding

After a gung-ho start, a joint venture of DBS providers DirecTV and EchoStar are seemingly backing out of the competitive bidding for advanced wireless spectrum. After making a deposit of $972 million and vigorously competing for the valuable resource in the first few rounds, a venture between EchoStar and DirecTV hasn’t made a bid in the last five rounds.

The apparent disappearance from the bidding of the two satellite TV companies, which desperately need a terrestrial network to offer high-speed and voice services to compete with cable and phone rivals, raises the question: what next? Expectations are high that the two rivals, which continually flirt with merging with each other, will try to cut a deal with other broadband wireless companies, including Mobile Satellite Ventures or newly-flush Clearwire.

DirecTV hinted as much in a statement

“Due to FCC auction rules we can’t comment other than to say that we are continuing to pursue a variety of options that will enable DirecTV to provide a broadband service to its customers nationwide,” said Robert Mercer, a spokesman for DirecTV, which is controlled by Rupert Murdoch’s News Corp.”

After the 16th round of bidding, T-Mobile leads the way in terms of licenses, with bids of $2.6 billion for 45 licenses. Verizon Wireless, however, has bid the highest dollar amount, $2.8 billion for four licenses. A cable-backed venture consisting of Time Warner, Comcast, Cox and Brighthouse Networks has maintained bids for 49 licenses at $550 million.

DBS providers had better move quickly in coming up with a broadband plan — according to a study released today by J.D. Power and Associates, cable operators are gaining ground with their digital TV services and are eating away at the customer satisfaction advantage that satellite providers have held.

Posted by Cynthia Brumfield on August 16, 2006 8:46 AM to IP Democracy