The decision by EchoStar Communications Corp. to drop out of a multibillion-dollar government auction for wireless airwaves means the nation’s No. 2 satellite-TV company will look elsewhere to launch its broadband Internet and phone services, analysts said.
“It’s not like there’s not options out there,” said Michael Hopkins, senior editor for SkyReport.com, a Golden-based satellite-industry publication. “This is good news for shareholders because you probably don’t want EchoStar spending that much money on spectrum.”
EchoStar shares closed at $33.11 on Wednesday, up 15 cents. News reports that EchoStar would withdraw from the auction came before the stock market closed.
Douglas County-based EchoStar – along with rival DirecTV – had formed Wireless DBS LLC to jointly bid for the spectrum. The joint venture had put up the biggest bankroll, about $972 million, to start the auction.
The Federal Communications Commission is auctioning off 1,122 spectrum licenses, each of which covers part of the country. The auction is expected to raise as much as $15 billion.
Verizon Communications Inc., with total bids valued at $9.5 billion, is the top bidder so far. T-Mobile USA Inc., the fourth-biggest U.S. mobile-phone company, is second with bids totaling $2.63 billion.
An EchoStar spokeswoman, Kathie Gonzalez, confirmed that the company was no longer participating in the auction. EchoStar serves more than 12 million subscribers; DirecTV serves more than 15 million.
Darris Gringeri, a spokesman for El Segundo, Calif.-based DirecTV – controlled by Rupert Murdoch’s News Crop. – said it will continue to pursue “a wide variety of options” to offer broadband service.
EchoStar and DirecTV announced in June that they were teaming with WildBlue Communications, based in Greenwood Village, to bundle Internet and TV service.
EchoStar and DirecTV are looking to deploy their own wireless networks to deliver phone and high-speed Internet access, said Tim Farrar, president of Menlo Park, Calif.-based TMF Associates.
He said EchoStar dropped out of the bidding because the price tag became too high.
“EchoStar concluded it could get spectrum elsewhere,” said Farrar, who predicted Tuesday in a research report that EchoStar would pull out of the auction.
Teaming up with Clearwire, a wireless high- speed Internet service provider, is one option, he said.
Another is working with so-called Mobile Satellite Service operators, which are working to launch satellites to provide broadband Internet access and wireless phone service.
Bloomberg News contributed to this report.
Staff writer Will Shanley can be reached at 303-820-1260 or wshanley@denverpost.com.
