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August 16, 2006 at 11:51 AM

Satellite TV companies pull out of auction

DirecTV and EchoStar Communications bowed out of a billion-dollar auction of U.S. airwaves for wireless services today, according to a Reuters story.

Analysts said they likely pulled out because the bidding got too high for the companies. Instead, analysts said the satellite TV companies may plan to roll out broadband access through a partnership.

The two competing satellite companies want to offer high-speed Internet access because they are losing customers to cable and other operators who can offer a bundle of services. The companies are looking at wireless broadband technologies, like WiMax, as a solution. In that case, a potential partner could be Craig McCaw’s Clearwire. Other partnerships could be formed with companies that use a satellite technology, such as Mobile Satellite Ventures, or perhaps even ICO another Craig McCaw company with offices in Kirkland.

As I understand it, the advantage that Clearwire has is that it already has begun to roll out service, and has a system up and running in about 30 markets. It also pledges to use WiMax, which is quickly becoming a global standard as South Korea and other countries, adopt it.

However, the advantage of Mobile Satellite Ventures or ICO is that they have national licenses that will allow them to operate across the U.S. in one single shot. The downside, perhaps, is that they don’t currently have consumer-friendly services available at retail.

Clearwire’s spectrum situation is more sticky. It has had to cobble together licenses in each market it wants to operate in. That ends up being a time-consuming and costly endeavor, and may even be impossible in some areas where its competition (Sprint Nextel) already owns the licenses.

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