E-Block Auction Still Active as Most Other Bidding Slows
Little 700 MHz auction bidding remains active except for the E-block, spectrum that would be ideally suited for video broadcast to cellphones. Sources said Qualcomm is probably the most active bidder, but at least one carrier seems to be challenging Qualcomm in some markets. Tom Peters of Wireless Strategy said the E block has been the spectrum to watch for several weeks, since the high bids on several of the largest blocks were made in Round 37.
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“There has been quite a bit of jockeying for position and aggressive bidding to get some of the larger properties,” Peters told us. “It looks like someone puts in a bid and then the incumbent holding the license counter bids. It just goes on like that. It has the effect of increasing the provisionally winning bid amount.” The A and B blocks, the other blocks with new bidders, haven’t been nearly as active, he said.
Bidders identities are secret, but Peters said the most likely big player in the E block is Qualcomm, seeking to add to its spectrum holdings to offer its MediaFLO service in additional markets or over larger spectrum blocks. Qualcomm already has 6 MHz in the D block across much of the nation, he noted. The E block is next to the D block. “If you had both D and E you'd have 12 MHz of unpaired spectrum,” Peters said. “They wouldn’t have to change out any hardware in order to expand the services that they offer. If they're getting 15 video channels now and several audio they'd be able to double that.”
Peters said the 6 MHz E-block licenses could be used several ways, but their highest value would probably be in a one-way transmission of video or audio, especially since the FCC rules allow relatively high power transmission in the block. Peters speculates that one or more carriers, possibly Alltel, MetroPCS or Leap Wireless, may be interested in the block, to offer video service to cellphones in some markets.
Rebecca Arbogast, analyst with Stifel Nicolaus, agreed that Qualcomm is most likely spurring activity in the E-block. “Qualcomm is the most obvious candidate, and often what is the most obvious is also the most likely,” she said. “Another possibility, given that the geographic license boundaries are the same, is that the high bidders for the A block licenses are trying to pick up some E block spectrum in effect to get a 6 and 12 MHz pairing.”
“We have been very bullish about Qualcomm’s prowess in this auction and in the E block in particular given its proximity to channels used by its MediaFLO product,” said Jessica Zufolo, analyst with Medley Global Advisors. “The strong push in the industry to market more mobile broadcast applications makes it pretty likely that Qualcomm is adding to the aggressive bidding activity in that block and possibly others.”