FCC's TV Airwaves Auction Drew $19.8 Billion, Led by T-Mobile

By Ryan Knutson Features Dow Jones Newswires

T-Mobile US Inc., Dish Network Corp. and Comcast Corp. were among the top buyers in the U.S. government's auction of airwaves, which drew $19.8 billion in bids.

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The results, announced Thursday, showed that T-Mobile was the biggest spender at $8 billion. It was followed by Dish, which spent $6.2 billion, and Comcast with $1.7 billion.

Verizon Communications Inc. and AT&T Inc., the nation's largest wireless carriers by subscribers, largely sat out the auction, which was run by the Federal Communications Commission and began last year. AT&T spent less than $1 billion on licenses, while Verizon declined to bid.

Verizon's absence, and the strong showing from companies like Comcast that don't currently operate cellular networks, is a sign of the changing telecommunications landscape. Verizon has said it believes wireless airwaves, known as spectrum, have become too expensive, and it would rather invest in technology to improve coverage than buy fresh airwaves.

AT&T, meanwhile, won a government contract to build a wireless network for public safety that comes with a large swath of airwaves. It has also indicated interest in content with its $85 billion offer to acquire media company Time Warner Inc.

It wasn't immediately clear what Comcast and Dish plan to do with the airwaves. Comcast said earlier this month it would start selling cellphone service to its home internet customers, and the service runs off the back of Verizon's network. Dish has been amassing a trove of wireless airwaves for years that it has yet to put to use.

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The complex reverse auction invited television broadcasters to sell their airwaves with opening prices provided by the government. Those bids fell until the agency got the licenses it needed at the lowest possible price.

The FCC said more than $10 billion would go to 175 TV stations that are selling their licenses. Almost 2,000 stations were eligible to participate in the auction. Two New Jersey public broadcasting stations sold licenses for $332 million. WWTO-TV, a Chicago religious station owned by Trinity Broadcasting Network, went for $304 million.

Other big sellers were 21st Century Fox, which sold $350 million of licenses, and Sinclair Broadcast Group Inc., which sold $313 million.

Drew FitzGerald and Shalini Ramachandran contributed to this article

Write to Ryan Knutson at ryan.knutson@wsj.com

T-Mobile US Inc., Dish Network Corp. and Comcast Corp. were among the top buyers in the U.S. government's wireless airwaves auction, which drew $19.8 billion in bids.

The results, announced Thursday, showed that T-Mobile was the biggest spender at $8 billion. It was followed by Dish, which spent $6.2 billion, and Comcast with $1.7 billion.

Verizon Communications Inc. and AT&T Inc., the nation's largest wireless carriers by subscribers, largely sat out the auction, which was run by the Federal Communications Commission and began last year. AT&T offered $910 million for the licenses, while Verizon declined to bid.

Verizon's absence, and the strong showing from companies like Comcast that don't currently operate cellular networks, is a sign of the changing telecommunications landscape. Verizon has said it believes wireless airwaves, known as spectrum, have become too expensive, and it would rather invest in technology to improve coverage than buy fresh airwaves.

AT&T said in 2014 that it planned to spend at least $9 billion in the auction, but it recently won a government contract to build a wireless network for public safety that comes with a large swath of airwaves. It has also indicated interest in other sectors like entertainment with its $85 billion deal to acquire media company Time Warner Inc. An AT&T spokesman declined to comment on the auction.

It wasn't immediately clear what Comcast and Dish plan to do with the airwaves. Comcast said earlier this month it would start selling cellphone service to its home internet customers, and the service runs off the back of Verizon's network. Dish has been amassing a trove of wireless airwaves for years that it has yet to put to use.

The auction's conclusion also means the telecom sector can resume deal talks after April 27, since participants were prohibited from such discussions as a safeguard against bidding collusion. Many analysts think T-Mobile could be an attractive merger candidate for another wireless carrier like Sprint Corp. or a cable provider like Comcast.

The complex reverse auction invited television broadcasters to sell their airwaves with opening prices provided by the government. Those bids fell until the agency got the licenses it needed at the lowest possible price. Then, the FCC sold those airwaves to companies that wanted them for cellular service.

The FCC said more than $10 billion would go to 175 TV stations that are selling their licenses. Two New Jersey public broadcasting stations sold licenses for $332 million. WWTO-TV, a Chicago religious station owned by Trinity Broadcasting Network, went for $304 million.

Other big sellers were 21st Century Fox, which sold $350 million of licenses, and Sinclair Broadcast Group Inc., which sold $313 million.

In previous years, spectrum acquisitions have been prudent investments. In 2006, Comcast was among the cable companies that bought a chunk of airwaves for $2.37 billion. In 2011, those companies sold the airwaves to Verizon for $3.6 billion and the rights to resell Verizon's network under their own brands, which Comcast is using as the foundation of its new wireless service.

Dish, which spent more than $10 billion in the previous auction in 2015, must start building its network soon or face FCC penalties. One option is for it to sell airwaves to, or merge with, a wireless carrier, which could put the spectrum to use faster. In February, Dish Chief Executive Charlie Ergen said he expected to see merger talks pick up after the auction.

Selling the airwaves Dish acquired in this year's auction might be more complicated, however. The FCC sale included one tier that could be bought by anyone and a "reserve" tier of low-band airwaves was set aside for companies that didn't already own a significant amount of them.

The rule largely prevented AT&T and Verizon from bidding on the reserve tier and also restricts most sales by the winning bidders to AT&T or Verizon.

Even though Verizon didn't buy any airwaves, the company said it was confident in its network position.

The airwaves are particularly important for T-Mobile, which until recently held almost no low-band frequencies. As a result, its network has suffered in buildings and rural areas.

AT&T and Verizon have more recently spent billions of dollars securing rights to higher-frequency airwaves that they hope will be useful in ultrafast networks still being developed.

Some speculators came out winners in the auction. A company associated with billionaire Michael Dell brought in $440.7 million by selling the broadcast licenses of 10 stations. Mr. Dell's investment arm, MSD Capital LP, created OTA Broadcasting LLC in 2011, spending about $90 million to scoop up two dozen local TV stations across the U.S.

Thomas Gryta contributed to this article.

Write to Ryan Knutson at ryan.knutson@wsj.com, Drew FitzGerald at andrew.fitzgerald@wsj.com and Shalini Ramachandran at shalini.ramachandran@wsj.com

(END) Dow Jones Newswires

April 13, 2017 18:22 ET (22:22 GMT)