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A joint venture of rival satellite operators, DirecTV Group and EchoStar, may have bowed out of the FCC's multi-billion dollar AWS auction today, reports Reuters and the Associated Press.
Analysts said the bidding likely got too high for the companies, which could instead pursue partnerships or even acquisitions to add high-speed wireless Internet service to their line-up to meet growing demands of consumers.
The satellite companies, joined by media conglomerate Liberty Media, had initially showed strong interest in the wireless licenses, paying the largest deposit of all 168 bidders that qualified for the sale, $972.5 million.
However, since Monday, the group called Wireless DBS LLC substantially reduced its participation in the auction.
The Federal Communications Commission sale of 1,122 licenses has already raised more than $9.4 billion and analysts have forecast that the sale could raise as much as $15 billion. The auction continues until there are no new bids, withdrawals or other activity.
"DirecTV will definitely do something and if it's not going to be a joint venture with EchoStar and build something, my best guess is they will make an investment in some other entity that has spectrum," said Kaufman Bros. analyst Todd Mitchell.
Analysts said a short list of possible partners or acquisition targets includes companies like Clearwire, Ico Global Communications, Motient Corp., Mobile Satellite Ventures (MSV) and Skyterra.
DirecTV spokesman Robert Mercer said the company is not allowed to comment on the auction while it is still running. "We continue to pursue a variety of options that will enable DirecTV to provide a broadband service to its customers nationwide," he said.
Bids on the 10 MHz regional licenses could total over $4 billion for nationwide coverage. Satellite operators may be looking for a cheaper route home. There's Clearwire and Sprint, of course, with their 2.5 GHz Mobile WiMAX networks. The 700 MHz band could be another option (in 2008), although it lacks the capacity using 6 MHz channels and could be even pricer.
Then there's the Mobile Satellite Spectrum.
TMF Associates predict the satellite consortium will refocus their attention on alternative spectrum bands, and particularly on the spectrum allocated to Mobile Satellite Services (MSS) operators.
DirecTV and Echostar have talked up Mobile WiMax and hinted at a partnership between Sprint or Clearwire, but next generation satphone providers, say industry analysists, could offer many advantages. Satellite television operators could get national 10 Mhz spectrum for voice and data much cheaper than the AWS band -- and deliver a satellite-based triple play.
TerreStar-1 will be the world's most powerful commercial mobile satellite capable of generating hundreds of spot beams (see illustration, above) to provide coverage of the fifty United States, Puerto Rico, the U.S. Virgin Islands and Canada. Service to subscribers will be on 1990-2025 MHz and 2165-2200 MHz.
The TerreStar-1, satellite (above) will operate in a Canadian orbital slot licensed to TMI Communications, a Canadian company. The system will be operational by the end of 2008 with a planned service life of fifteen years. Space Systems/Loral, today announced that it has been awarded a contract to build the TerreStar-2 MSS satellite for TerreStar Networks.
TerreStar-1, with an antenna almost sixty feet across, will be able to communicate with terrestrial base stations and standard wireless devices. Along with its joint venture partner TMI Communications Inc. (TMI), TerreStar will utilize spectrum re-use to deploy a hybrid network that will provide high quality, cost-effective, seamless wireless services to urban, rural and remote regions of North America.
TerreStar's two satellite system, together with an Ancillary Terrestrial Component (ATC), is designed to provide next-generation, 2-GHz mobile voice and data communications, monitoring and messaging services throughout the United States and Canada.
The FCC's Mobile Satellite Service (pdf) is in the 2.0/2.2 GHz frequency band (near the 1.7/2.1 GHz AWS band. Terrestrial repeaters are a new wrinkle for satphone providers. They will let mobile satellite operators "double dip" their frequencies, also using them on terrestrial towers for cellular-like service (without the cost of new frequencies).
The FCC believes ATC will make satphones a viable business. Smaller, cheaper satphones, competitive in price and coverage, are now anticipated thanks to the FCC's ruling that allowed 2 GHz MSS phones to use cell towers. Satellites can be used as back-up.
Handheld satphones currently rely on LEO-based Iridium or GlobalStar for all connections. That raises their cost and reduces their penetration. Huge satellite antennas delivering powerful spotbeams from geosychronous space, complimented with terrestrial repeaters with better penetration and more capacity, are the new economic model, say industry observers.
The same shareholders in MSV (using the "L" Band) are also the principals of a new S-band mobile venture, TerreStar Networks, which uses the same basic technology as MSV and could presumably share ATC towers. The "L" band is between 1616-1626.5 MHz, and typically used by LEO satellites like Iridium and GlobeStar while the "S" band is between 2.0 and 2.2 GHz and typically used by geosynchrous satellites like Inmarsat. Both may use terrestrial repeaters in the future.
XM Satellite Radio Chairman Gary Parsons was instrumental in setting up MSV and presides over its board. Both companies grew out of American Mobile Satellite Consortium, now Motient Corp.
Motient is a nationwide provider of terrestrial wireless data solutions through its own DataTac Network. Motient is also the controlling shareholder of TerreStar Networks.
MSV-1 and MSV-2 satellites (above), built by Boeing, for Mobile Satellite Ventures will cover Canada ; the United States, including Alaska, Hawaii, Puerto Rico; the Virgin Islands; Mexico and the Caribbean Basin. The third satellite, MSV-SA will introduce MSV's advanced communications services into South America. The satellites are scheduled to launch in 2009 and 2010.
Mobile Satellite Ventures (MSV) is backed by Motient, SkyTerra Communications, TMI Communications (a subsidiary of BCE Inc.), Spectrum Equity and Columbia Capital. Because it is a Canadian company, additional legal issues and agreements surrounding terrestrial repeaters, frequency allocation and wire tapping under U.S. law were necessary.
MSV, which has has offices in Reston, VA and Ottawa, Canada, might benefit from partners like DirecTV and EchoStar who could help build the infrastructure to provide integrated voice, data and video. Everywhere.
 Cellular pioneer Craig McCaw’s ICO mobile-satellite communications venture hopes to do it again, providing mobile voice and data services to U.S. customers with the help of a network of ground-based repeaters.
ICO's Hybrid Satellite/Terrestrial MSS system is scheduled to be operational in July of 2007. ICO's satellite is being built by Space Systems/Loral. Loral and ICO North America have completed certification of all applicable FCC milestones to date.
ICO is one of two companies awarded licenses by the FCC to provide satellite-based communications services with ATC technology in the 2-GHz frequency band.
McCaw terminated its contract with Boeing Satellite Systems leaving six mostly completed satellites on Boeing’s factory floor. Four others are in initial stages of construction. Loral is the new school. Their contract with ICO calls for a large geosynchronous satellite, featuring a 12-meter-diameter unfurlable S-band antenna. Loral is also under contract with TerreStar to build a nearly identical system.
In addition to MSV, TerreStar and ICO, Inmarsat is expected to enter the market, with two, fourth-generation satellites now operational. Like ICO and TerreStar, Inmarsat is counting on ground-based signal boosters, says SpaceNews, but using the L-band, not the MSS band planned by ICO and TerreStar.
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