WASHINGTON(Reuters) – Verizon Communications Inc and AT&T Inc, the twolargest U.S. mobile phone companies, grabbed the lion’s share of a$19.12 billion auction of airwaves being vacated by televisionbroadcasters.
Verizon and AT&T won more than $16 billion of licenses,according to auction results released on Thursday, airwaves they planto use to enhance existing voice and data services, as well as underpina new wave of wireless technologies.
The possibility of a nationwide video network was raised by a $711million slice of the 700 megahertz airwaves won by Frontier Wireless, apartner of satellite television operation DISH Network Corp. DISHdeclined to comment.
But No. 2 wireless provider Verizon and No. 1-ranked AT&Tdominated the Federal Communications Commission auction that startedJanuary 24 and ended Tuesday after 260 round of bidding.
"It means that the two big guys just got much bigger," said Rebecca Arbogast, an analyst with Stifel Nicolaus.
Verizon Wireless, a joint venture with Vodafone Group Plc, won thebiggest nationwide block of spectrum, with a $4.74 billion bid thattrumped $4.71 billion offered by Internet leader Google Inc, FCCofficials said.
Verizon Wireless also won 25 regional licenses.
AT&T won 227 licenses in regional licenses around the UnitedStates. The company can pair those airwave with a large piece of700-megahertz spectrum it gained earlier this year in its $2.5 billionacquisition of Aloha Partners.
"AT&T’s strong spectrum holdings position the company to furtherenhance the quality and reliability of existing wireless broadband andvoice services, and to set the foundation for new-generation wirelessbroadband technologies and services," Ralph de la Vega, head ofAT&T’s wireless unit, said in a statement.
Overall, AT&T spent a total of about $6.64 billion and Verizon spent $9.63 billion at the auction, Arbogast said.
Verizon shares closed 2.8 percent higher to $36.12 on the New YorkStock Exchange, while shares of AT&T ended up 2.2 percent at$36.85, also on the NYSE.
The 700-megahertz airwaves are considered valuable because they travel long distances and can penetrate thick walls.
Analysts say the major carriers will be able use them to offerconsumers more advanced services such as broadband access via mobilephones and wireless broadband to laptop computers.
FCC Chairman Kevin Martin called the auction "a significantsuccess," citing the record amount of money raised for the U.S.Treasury and a requirement the nationwide spectrum won by Verizon beaccessible to a range of devices and software.
Martin said the auction would enhance competition, citing the spectrum won by Frontier Wireless.
But the auction results dimmed hopes that the newly availablespectrum would lead to a major new competitor in the wireless business.
Google’s participation in the auction had sparked some hopes thatthe company could jump into the wireless business. But Google won nolicenses in the auction, the FCC said.
Nevertheless, the auction was seen as a victory for Google, sincethe bidding was high enough to trigger the "open-platform" rules itrequested for the nationwide airwaves eventually won by Verizon.
Google called it a victory for American consumers. "Consumers soonshould begin enjoying new, Internet-like freedom to get the most out oftheir mobile phones and other wireless devices," said a statement fromGoogle lawyers Richard Whitt and Joseph Faber.
Google shares edged up 0.4 percent to $433.55 by Nasdaq’s close.
The FCC also said it would set aside a block of the 700-MHz airwaves that did not reach the $1.3 billion minimum bid.
This block was to be shared with public safety agencies and drew alone bid of $472 million, which was then subtracted from an earlier$19.59 billion tally for the auction.
Industry analysts have speculated that the minimum price was toohigh, or that the rules for negotiations with emergency responders weretoo onerous.
The FCC could decide to re-auction the so-called D-block airwaves and perhaps modify the rules to make it more attractive.
(Additional reporting by Sinead Carew in New York; Editing by Tim Dobbyn)
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