The First 96 Contenders in the FCC's Spectrum Auction Announced

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Includes: AMX, AT, CHTRQ, CVC, CXR, DCM, DTEGY, GMST, GOOG, MSFT, QCOM, T, TMUS, USM, VZ
by: FP Trading Desk

The Federal Communications Commission has released a list of registered bidders for its Jan. 24, 2008 700MHz spectrum auction and Google’s (NASDAQ:GOOG) application (under Google Airwaves Inc.), and two ventures backed by Microsoft (NASDAQ:MSFT) co-founder Paul Allen – Vulcan Spectrum LLC and Bend Cable Communications LLC – were among the 96 accepted. However, applications from AT&T (NYSE:T), Qualcomm (NASDAQ:QCOM), Alltel (NYSE:AT), and Verizon Wireless (NYSE:VZ) were among the 170 deemed incomplete.

They now have an extra week until Jan. 4 at 6 p.m. ET to resubmit short-form applications “having corrected the deficiencies indicated,” the FCC said. This is also the deadline for upfront payments.

The spectrum is currently owned by broadcasters and has been used for analog television. But they will shift to digital signals early in 2009, freeing up what the FCC has called “beachfront property.”

A mock auction will be held on Jan. 22, and the actual process begins on Jan. 24.

Michael Rollins at Citigroup expects incomplete applications will be completed soon. The analyst was also not surprised to see that most wireless carriers and some multiple system operators [MSO] – companies that own and operate two or more cable TV systems – plan to bid.

In addition to the names already mentioned, he noted the registration of entities associated with T-Mobile (DT), Leap Wireless (LEAP), MetroPCS (PCS) and United States Cellular (NYSE:USM). Cable MSOs included Cablevision (NYSE:CVC), Charter (NASDAQ:CHTR), and Cox (CXR). Among the surprises were America Movil (NYSE:AMX), Qualcomm, a consortium between PBS and Gemstar (GMST), as well as NTT DoCoMo (NYSE:DCM), Mr. Rollins told clients in a note.

How can investors play these developments? Given that the auction could lead to new entrants, American Tower Corp. (NYSE:AMT) – Citigroup’s favorite name among tower stocks – and others in the group could get a lift, the analyst said. He rates the shares a “buy.”