How Charlie Ergen turned a satellite TV provider into a spectrum powerhouse, and what he might do next

Phil Goldstein

Dish Network (NASDAQ: DISH) is spending around $10 billion to acquire a wide range of spectrum licenses in the FCC's now-completed AWS-3 spectrum auction. That spectrum, combined with the wide-ranging spectrum licenses that Dish already owns, will turn Charlie Ergen's company into a spectrum powerhouse. 

But it's still not clear what Ergen's Dish is going to do with all of its airwaves.

Before we dive into what happens now following the AWS-3 auction, it's worth taking a moment to step back and recount how Dish, under Chairman Charlie Ergen, built itself up into one of the five largest spectrum holders in the U.S. wireless market.

In 2008, Dish was a satellite TV operator with 13.5 percent market share of the pay-TV market, behind rival DirecTV's (NASDAQ: DTV) 17.4 percent market share. That was when Ergen started moving into the wireless industry:

  • Dish's EchoStar purchased 700 MHz E Block spectrum in 2008 in the FCC's auction of those radio waves.
  • In the summer of 2011 Dish spent $2.77 billion to acquire 40 MHz of S-band satellite spectrum from bankrupt TerreStar and DBSD North America.
  • Then, in December 2012, the FCC voted to let Dish use its satellite spectrum for terrestrial use, a major windfall for Ergen. Dish's 40 MHz of spectrum, dubbed AWS-4, runs from 2000-2020 MHz (for the uplink) and 2180-2200 MHz (for the downlink). However, the FCC said Dish must cover at least 40 percent of the population in areas covered by its AWS-4 spectrum with a wireless network in the next four years (the end of 2016), or face penalties. Further, the FCC said Dish must cover at least 70 percent of that population within seven years.
  • Dish tried and failed in the spring of 2013 to acquire Sprint (NYSE:S), losing a bidding war to SoftBank. Dish also tried to acquire Sprint partner Clearwire, which Sprint ultimately bought. Both deals would have netted Dish troves of spectrum.
  • In February 2014, Dish paid $1.564 billion to acquire the 10 MHz H Block in the 1900 MHz PCS band in an auction--Dish was the only major bidder in the auction. Impressively, Dish also managed to get the FCC to agree to let Dish use the 2000-2020 MHz band in the H Block for downlink operations instead of uplink operations. The H Block is a block of paired airwaves that runs from 1915-1920 MHz (for the uplink) and from 1995-2000 MHz (for the downlink).
  • Finally, Dish is also trying to gain control of bankrupt LightSquared's L-band spectrum--and seems poised to succeed.

And now, thanks to Dish's 85 percent ownership in AWS-3 bidding entities Northstar Wireless and SNR Wireless, the company will get even more spectrum. Notably, it will also get that spectrum on the cheap--both Northstar and SNR will receive 25 percent small-business discounts from the FCC because they are "designated entities." Northstar and SNR spent a combined $13.32 billion in gross bids but that number will be lowered to around $10 billion due to the discounts. Dish's American AWS-3 Wireless, its wholly-owned, direct-subsidiary bidding entity, did not win any spectrum in the auction.

So what did Dish, via its designated entities, win in the AWS-3 auction? Lots of paired spectrum in major markets. 

In total, Northstar won 345 total licenses (out of 1,614 up for grabs) and SNR won 357. Together they won seven licenses in the highly coveted 10x10 MHz J Block (out of 176 total), mainly in secondary markets (though SNR won the J Block in Minneapolis, Charlotte, N.C., and Cincinnati, Ohio.)

Northstar won the 5x5 MHz I and G Blocks in New York, the G Block in Los Angeles, the 5x5 MHz H and I Blocks in Chicago, the G Block in Dallas, and the I Block in Boston, and many other paired spectrum blocks in large markets. Meanwhile, SNR Wireless won the H Block in New York; the G Block in Atlanta, Boston, Chicago, Philadelphia, and Washington, D.C.; and many other paired spectrum blocks in large markets.

What is Dish going to do with all of that spectrum? That's been the question ever since Dish started buying up airwaves. In August, Ergen said this about the company's wireless ambitions, according to a Seeking Alpha transcript: "I think our dream would be to compete in the marketplace, bring a better product to consumers, be disruptive, be innovative and enhance the video business that we have today." He noted that more and more people are going to view video on mobile devices via over-the-top content models and that Dish would look to launch a new service that "hopefully is incremental to the business today, hopefully has a different advertising model than the way we do it today with DVRs, and hopefully, it leads to a mobile business or wireless business that's incremental revenue to our content partners."

Should we take that at face value? Perhaps we should. But there are reasons to doubt that's what Dish wants to do with its spectrum.

Here are some thoughts on what Dish might do next, from least likely to most likely:

  • Dish could buy its way into wireless by acquiring or merging with T-Mobile US (NYSE:TMUS). T-Mobile parent Deutsche Telekom clearly would like to unload its U.S. unit, but a deal with Dish seems unlikely since DT's asking price might be too high for Ergen--after all, Dish's bidding entities now owe the FCC $10 billion for spectrum.
  • Dish could partner with Sprint to have Sprint host Dish's spectrum on its multi-mode base stations. Dish and Sprint are already partnering on fixed TD-LTE service on a trial basis. Would Dish want to take that nationally? Potentially, but then why would Dish have spent so much on AWS-3 spectrum when it could already do that with its existing airwaves? Either way, Dish is now buying into an ecosystem that other carriers will invest in (AT&T and Verizon both purchased huge blocks of AWS-3 spectrum, meaning that they will now start buying network infrastructure and handsets that can use the spectrum).
  • Dish might lease its spectrum as excess capacity back to wireless carriers, a model that the FCC's AWS-3 auction rules allow. Jefferies analysts Mike McCormack, Scott Goldman and Tudor Mustata wrote in a research note that "we continue to believe that Dish's attractive spectrum portfolio should accrete in value over time towards the overall price/MHz-POP paid in the AWS-3 auction. Given our expectations for delays in the [600 MHz incentive] spectrum auction, Dish's spectrum arsenal represents the most attractive, available spectrum in the near-to mid-term."

TMF Associates analyst Tim Farrar told me that for the most part Dish "focused on the key cities, where the expectation is Verizon (NYSE: VZ) and AT&T (NYSE: T) are most capacity constrained and therefore have the most need to get access to additional spectrum."

"The whole point here is that he [Ergen] is his basically trying to force Verizon or AT&T to buy or lease some of Dish's spectrum," he added. "No way this is a precursor to [Dish] building something out."

If Dish wanted to build out a network, why not invest $10 billion in network infrastructure to do so? Farrar, who accurately predicted that Dish's designated entities would win more than $9.6 billion in spectrum, said Verizon and AT&T are the only companies in a position to pay Dish what Ergen thinks his spectrum his worth. A deal with Verizon would be more likely since AT&T spent $18.2 billion to get a nationwide 10x10 MHz footprint of AWS-3 spectrum--AT&T is also working to close its $48.5 billion purchase of DirecTV.

However, Sprint could undermine a deal between Dish and Verizon by selling its excess 2.5 GHz spectrum, something Sprint CEO Marcelo Claure indicated in early January that Sprint was open to doing. "Is Sprint going to do a deal with Verizon to sell them 2.5 [GHz spectrum] and leave Charlie stuck?" Farrar said. "I think the answer to that is very likely, yes. Because Charlie has just cost everyone $20 billion in terms of extra money they didn't need to bid on spectrum if Dish hadn't been so aggressive."

Ergen has built Dish into a major player in the wireless industry by cobbling together a massive, diverse spectrum portfolio via financial, legal and regulatory wheeling and dealing. Now the question is whether he can do anything with all of that spectrum.--Phil

How Charlie Ergen turned a satellite TV provider into a spectrum powerhouse, and what he might do next

Phil Goldstein

Dish Network (NASDAQ: DISH) is spending around $10 billion to acquire a wide range of spectrum licenses in the FCC's now-completed AWS-3 spectrum auction. That spectrum, combined with the wide-ranging spectrum licenses that Dish already owns, will turn Charlie Ergen's company into a spectrum powerhouse. 

But it's still not clear what Ergen's Dish is going to do with all of its airwaves.

Before we dive into what happens now following the AWS-3 auction, it's worth taking a moment to step back and recount how Dish, under Chairman Charlie Ergen, built itself up into one of the five largest spectrum holders in the U.S. wireless market.

In 2008, Dish was a satellite TV operator with 13.5 percent market share of the pay-TV market, behind rival DirecTV's (NASDAQ: DTV) 17.4 percent market share. That was when Ergen started moving into the wireless industry:

  • Dish's EchoStar purchased 700 MHz E Block spectrum in 2008 in the FCC's auction of those radio waves.
  • In the summer of 2011 Dish spent $2.77 billion to acquire 40 MHz of S-band satellite spectrum from bankrupt TerreStar and DBSD North America.
  • Then, in December 2012, the FCC voted to let Dish use its satellite spectrum for terrestrial use, a major windfall for Ergen. Dish's 40 MHz of spectrum, dubbed AWS-4, runs from 2000-2020 MHz (for the uplink) and 2180-2200 MHz (for the downlink). However, the FCC said Dish must cover at least 40 percent of the population in areas covered by its AWS-4 spectrum with a wireless network in the next four years (the end of 2016), or face penalties. Further, the FCC said Dish must cover at least 70 percent of that population within seven years.
  • Dish tried and failed in the spring of 2013 to acquire Sprint (NYSE:S), losing a bidding war to SoftBank. Dish also tried to acquire Sprint partner Clearwire, which Sprint ultimately bought. Both deals would have netted Dish troves of spectrum.
  • In February 2014, Dish paid $1.564 billion to acquire the 10 MHz H Block in the 1900 MHz PCS band in an auction--Dish was the only major bidder in the auction. Impressively, Dish also managed to get the FCC to agree to let Dish use the 2000-2020 MHz band in the H Block for downlink operations instead of uplink operations. The H Block is a block of paired airwaves that runs from 1915-1920 MHz (for the uplink) and from 1995-2000 MHz (for the downlink).
  • Finally, Dish is also trying to gain control of bankrupt LightSquared's L-band spectrum--and seems poised to succeed.

And now, thanks to Dish's 85 percent ownership in AWS-3 bidding entities Northstar Wireless and SNR Wireless, the company will get even more spectrum. Notably, it will also get that spectrum on the cheap--both Northstar and SNR will receive 25 percent small-business discounts from the FCC because they are "designated entities." Northstar and SNR spent a combined $13.32 billion in gross bids but that number will be lowered to around $10 billion due to the discounts. Dish's American AWS-3 Wireless, its wholly-owned, direct-subsidiary bidding entity, did not win any spectrum in the auction.

So what did Dish, via its designated entities, win in the AWS-3 auction? Lots of paired spectrum in major markets. 

In total, Northstar won 345 total licenses (out of 1,614 up for grabs) and SNR won 357. Together they won seven licenses in the highly coveted 10x10 MHz J Block (out of 176 total), mainly in secondary markets (though SNR won the J Block in Minneapolis, Charlotte, N.C., and Cincinnati, Ohio.)

Northstar won the 5x5 MHz I and G Blocks in New York, the G Block in Los Angeles, the 5x5 MHz H and I Blocks in Chicago, the G Block in Dallas, and the I Block in Boston, and many other paired spectrum blocks in large markets. Meanwhile, SNR Wireless won the H Block in New York; the G Block in Atlanta, Boston, Chicago, Philadelphia, and Washington, D.C.; and many other paired spectrum blocks in large markets.

What is Dish going to do with all of that spectrum? That's been the question ever since Dish started buying up airwaves. In August, Ergen said this about the company's wireless ambitions, according to a Seeking Alpha transcript: "I think our dream would be to compete in the marketplace, bring a better product to consumers, be disruptive, be innovative and enhance the video business that we have today." He noted that more and more people are going to view video on mobile devices via over-the-top content models and that Dish would look to launch a new service that "hopefully is incremental to the business today, hopefully has a different advertising model than the way we do it today with DVRs, and hopefully, it leads to a mobile business or wireless business that's incremental revenue to our content partners."

Should we take that at face value? Perhaps we should. But there are reasons to doubt that's what Dish wants to do with its spectrum.

Here are some thoughts on what Dish might do next, from least likely to most likely:

  • Dish could buy its way into wireless by acquiring or merging with T-Mobile US (NYSE:TMUS). T-Mobile parent Deutsche Telekom clearly would like to unload its U.S. unit, but a deal with Dish seems unlikely since DT's asking price might be too high for Ergen--after all, Dish's bidding entities now owe the FCC $10 billion for spectrum.
  • Dish could partner with Sprint to have Sprint host Dish's spectrum on its multi-mode base stations. Dish and Sprint are already partnering on fixed TD-LTE service on a trial basis. Would Dish want to take that nationally? Potentially, but then why would Dish have spent so much on AWS-3 spectrum when it could already do that with its existing airwaves? Either way, Dish is now buying into an ecosystem that other carriers will invest in (AT&T and Verizon both purchased huge blocks of AWS-3 spectrum, meaning that they will now start buying network infrastructure and handsets that can use the spectrum).
  • Dish might lease its spectrum as excess capacity back to wireless carriers, a model that the FCC's AWS-3 auction rules allow. Jefferies analysts Mike McCormack, Scott Goldman and Tudor Mustata wrote in a research note that "we continue to believe that Dish's attractive spectrum portfolio should accrete in value over time towards the overall price/MHz-POP paid in the AWS-3 auction. Given our expectations for delays in the [600 MHz incentive] spectrum auction, Dish's spectrum arsenal represents the most attractive, available spectrum in the near-to mid-term."

TMF Associates analyst Tim Farrar told me that for the most part Dish "focused on the key cities, where the expectation is Verizon (NYSE: VZ) and AT&T (NYSE: T) are most capacity constrained and therefore have the most need to get access to additional spectrum."

"The whole point here is that he [Ergen] is his basically trying to force Verizon or AT&T to buy or lease some of Dish's spectrum," he added. "No way this is a precursor to [Dish] building something out."

If Dish wanted to build out a network, why not invest $10 billion in network infrastructure to do so? Farrar, who accurately predicted that Dish's designated entities would win more than $9.6 billion in spectrum, said Verizon and AT&T are the only companies in a position to pay Dish what Ergen thinks his spectrum his worth. A deal with Verizon would be more likely since AT&T spent $18.2 billion to get a nationwide 10x10 MHz footprint of AWS-3 spectrum--AT&T is also working to close its $48.5 billion purchase of DirecTV.

However, Sprint could undermine a deal between Dish and Verizon by selling its excess 2.5 GHz spectrum, something Sprint CEO Marcelo Claure indicated in early January that Sprint was open to doing. "Is Sprint going to do a deal with Verizon to sell them 2.5 [GHz spectrum] and leave Charlie stuck?" Farrar said. "I think the answer to that is very likely, yes. Because Charlie has just cost everyone $20 billion in terms of extra money they didn't need to bid on spectrum if Dish hadn't been so aggressive."

Ergen has built Dish into a major player in the wireless industry by cobbling together a massive, diverse spectrum portfolio via financial, legal and regulatory wheeling and dealing. Now the question is whether he can do anything with all of that spectrum.--Phil

AWS-3 AUCTION RESULTS: AT&T leads with $18.2B, Verizon at $10.4B, Dish at $10B and T-Mobile at $1.8B

1. AT&T (bidding under the name AT&T Wireless Services 3 LLC) = $18,189,285,000
2. Verizon (bidding under the name Cellco Partnership d/b/a Verizon Wireless) = $10,430,017,000
3. Dish (bidding under the name Northstar Wireless, LLC and SNR Wireless LicenseCo, LLC)  = $9,995,567,775 ($13,327,423,700 in gross bids plus a 25 percent discount for being designated entities)
4. T-Mobile (bidding under the name T-Mobile License LLC) = $1,774,023,000

The FCC has revealed the identities of the winning bidders in the AWS-3 spectrum, and AT&T (NYSE: T) was the biggest bidder, with close to $18.2 billion in provisionally winning bids, roughly in line with analysts' expectations. Verizon Wireless (NYSE: VZ) wound up bidding $10.43 billion, less than many analysts had expected (most had expected Verizon to bid $15 billion to $20 billion).

In a major surprise, Dish Network (NASDAQ: DISH) wound up bidding a net total of close to $10 billion (and $13.3 billion in gross provisional winning bids; Dish's designated bidding entities Wireless, LLC and SNR Wireless LicenseCo, LLC  got a 25 percent discount). Most analysts had expected Dish to bid at most $6 billion and likely far less. T-Mobile US (NYSE:TMUS) bid $1.77 billion, below analysts' expectations of $2 billion to $3 billion.

Bidding in the auction ended Thursday after 341 rounds and total of $44.899 billion in provisional winning bids. A total of 65 MHz of spectrum was auctioned, including 50 MHz of paired spectrum and 15 MHz of unpaired uplink spectrum. Out of a total of 70 eligible bidding entities, 31 walked away with spectrum. When taking into account discounts, the auction had net proceeds of $41.329 billion.

According to analysts at Jefferies and New Street Research, the paired spectrum in the auction (1755-1780 MHz for uplink operations and 2155-2180 MHz for downlink) sold for an average of $2.71 per MHz-POP, well above what analysts had expected before the auction began Nov. 13. The uplink spectrum, the 1695-1710 MHz band, on average sold for much less at an average of 52 cents per MHz-POP.

The paired spectrum in the auction includes the G Block (1755-1760/2155-2160 MHz), H Block (1760-1765/2160-2165 MHz), I Block (1765-1770/2165-2170 MHz), and J Block (1770-1780 MHz /2170-2180 MHz). The G Block is licensed in 734 Cellular Market Area (CMA) geographies and the other paired spectrum blocks are licensed in 176 geographically larger Economic Areas (EAs). A total of 1,614 licenses were up for auction and the FCC wound up keeping only three of them.

The paired spectrum licenses drew by far the largest bids, especially for the 10x10 MHz J Block licenses in major metropolitan areas like New York City, Los Angeles and Chicago.

AT&T won the J Block in the New York area, the license with the highest provisional winning bid, and paid $2.76 billion for the spectrum. AT&T also won the 10x10 MHz J Block in Chicago, Boston, Houston, Miami, Atlanta, Orlando, Fla., San Antonio, Texas, Cleveland, and other markets.  AT&T won a total of 251 licenses.

Verizon won the J Block in Los Angeles, Washington, D.C., San Francisco, Philadelphia, Detroit, Phoenix, Seattle, Denver, Portland, Ore., San  Diego, Indianapolis, and other markets. Verizon also won the H and I Blocks in Dallas, the H Block in Orlando, Fla., and many other paired spectrum blocks. Verizon won a total of 181 licenses.

Dish was the big surprise. Most analysts had not expected Dish or its bidding partners to walk away with much paired spectrum. However, Northstar won the I and G Blocks in New York, the G Block in Los Angeles, the H and I Blocks in Chicago, the G Block in Dallas, and the I Block in Boston; and many other paired spectrum blocks in large markets. Northstar won a total of 345 licenses. Meanwhile, SNR Wireless won the J Block in Minneapolis, Charlotte, N.C., and Cincinnati, Ohio; the H Block in New York; the G Block in Atlanta, Boston, Chicago, Philadelphia, and Washington, D.C.; and many other paired spectrum blocks in large markets. Overall, SNR won 357 licenses.

T-Mobile won a total of 157 licenses and its strategy seemed to be based on winning lots of 5x5 MHz blocks that it can eventually aggregate in markets where it has 15x15 MHz AWS-1 spectrum holdings to create 20x20 MHz channels. T-Mobile won the H Block in Houston, Miami, Cleveland and New Orleans; the G Block in Phoenix and Salt Lake City; the I Block in Indianapolis, Oklahoma City, Memphis, Tenn., and San Antonio and Austin, Texas; and many other paired spectrum blocks in numerous markets.  

Each winning bidder must have on deposit with the FCC enough funds to cover the down payments on its winning bids by 6 p.m. Eastern Time on Feb. 13.  By 6 p.m. on Feb. 13, winning bidders must submit both a properly-completed long-form application and make sure the FCC has on hand accurate ownership information for the bidding entity. Final payments are due by 6 p.m. ET on March 2.

Check back with FierceWireless for continuing AWS-3 auction coverage.

For more:
- see this FCC page
- see this FCC public notice
- see this FCC list of winning bidders

Related Articles:
IT'S OVER: FCC's AWS-3 spectrum auction ends at record $44.9B in bids
As AWS-3 auction winds down, attention turns to what happens next
Analysts: Bidding in NYC, LA and Chicago in AWS-3 auction is 94% above average prices
AWS-3 auction inches on, with bids passing $43.7B
FCC moves to next stage of AWS-3 auction as bids climb toward $42B

AWS-3 AUCTION RESULTS: AT&T leads with $18.2B, Verizon at $10.4B, Dish at $10B and T-Mobile at $1.8B

1. AT&T (bidding under the name AT&T Wireless Services 3 LLC) = $18,189,285,000
2. Verizon (bidding under the name Cellco Partnership d/b/a Verizon Wireless) = $10,430,017,000
3. Dish (bidding under the name Northstar Wireless, LLC and SNR Wireless LicenseCo, LLC)  = $9,995,567,775 ($13,327,423,700 in gross bids plus a 25 percent discount for being designated entities)
4. T-Mobile (bidding under the name T-Mobile License LLC) = $1,774,023,000

The FCC has revealed the identities of the winning bidders in the AWS-3 spectrum, and AT&T (NYSE: T) was the biggest bidder, with close to $18.2 billion in provisionally winning bids, roughly in line with analysts' expectations. Verizon Wireless (NYSE: VZ) wound up bidding $10.43 billion, less than many analysts had expected (most had expected Verizon to bid $15 billion to $20 billion).

In a major surprise, Dish Network (NASDAQ: DISH) wound up bidding a net total of close to $10 billion (and $13.3 billion in gross provisional winning bids; Dish's designated bidding entities Wireless, LLC and SNR Wireless LicenseCo, LLC  got a 25 percent discount). Most analysts had expected Dish to bid at most $6 billion and likely far less. T-Mobile US (NYSE:TMUS) bid $1.77 billion, below analysts' expectations of $2 billion to $3 billion.

Bidding in the auction ended Thursday after 341 rounds and total of $44.899 billion in provisional winning bids. A total of 65 MHz of spectrum was auctioned, including 50 MHz of paired spectrum and 15 MHz of unpaired uplink spectrum. Out of a total of 70 eligible bidding entities, 31 walked away with spectrum. When taking into account discounts, the auction had net proceeds of $41.329 billion.

According to analysts at Jefferies and New Street Research, the paired spectrum in the auction (1755-1780 MHz for uplink operations and 2155-2180 MHz for downlink) sold for an average of $2.71 per MHz-POP, well above what analysts had expected before the auction began Nov. 13. The uplink spectrum, the 1695-1710 MHz band, on average sold for much less at an average of 52 cents per MHz-POP.

The paired spectrum in the auction includes the G Block (1755-1760/2155-2160 MHz), H Block (1760-1765/2160-2165 MHz), I Block (1765-1770/2165-2170 MHz), and J Block (1770-1780 MHz /2170-2180 MHz). The G Block is licensed in 734 Cellular Market Area (CMA) geographies and the other paired spectrum blocks are licensed in 176 geographically larger Economic Areas (EAs). A total of 1,614 licenses were up for auction and the FCC wound up keeping only three of them.

The paired spectrum licenses drew by far the largest bids, especially for the 10x10 MHz J Block licenses in major metropolitan areas like New York City, Los Angeles and Chicago.

AT&T won the J Block in the New York area, the license with the highest provisional winning bid, and paid $2.76 billion for the spectrum. AT&T also won the 10x10 MHz J Block in Chicago, Boston, Houston, Miami, Atlanta, Orlando, Fla., San Antonio, Texas, Cleveland, and other markets.  AT&T won a total of 251 licenses.

Verizon won the J Block in Los Angeles, Washington, D.C., San Francisco, Philadelphia, Detroit, Phoenix, Seattle, Denver, Portland, Ore., San  Diego, Indianapolis, and other markets. Verizon also won the H and I Blocks in Dallas, the H Block in Orlando, Fla., and many other paired spectrum blocks. Verizon won a total of 181 licenses.

Dish was the big surprise. Most analysts had not expected Dish or its bidding partners to walk away with much paired spectrum. However, Northstar won the I and G Blocks in New York, the G Block in Los Angeles, the H and I Blocks in Chicago, the G Block in Dallas, and the I Block in Boston; and many other paired spectrum blocks in large markets. Northstar won a total of 345 licenses. Meanwhile, SNR Wireless won the J Block in Minneapolis, Charlotte, N.C., and Cincinnati, Ohio; the H Block in New York; the G Block in Atlanta, Boston, Chicago, Philadelphia, and Washington, D.C.; and many other paired spectrum blocks in large markets. Overall, SNR won 357 licenses.

T-Mobile won a total of 157 licenses and its strategy seemed to be based on winning lots of 5x5 MHz blocks that it can eventually aggregate in markets where it has 15x15 MHz AWS-1 spectrum holdings to create 20x20 MHz channels. T-Mobile won the H Block in Houston, Miami, Cleveland and New Orleans; the G Block in Phoenix and Salt Lake City; the I Block in Indianapolis, Oklahoma City, Memphis, Tenn., and San Antonio and Austin, Texas; and many other paired spectrum blocks in numerous markets.  

Each winning bidder must have on deposit with the FCC enough funds to cover the down payments on its winning bids by 6 p.m. Eastern Time on Feb. 13.  By 6 p.m. on Feb. 13, winning bidders must submit both a properly-completed long-form application and make sure the FCC has on hand accurate ownership information for the bidding entity. Final payments are due by 6 p.m. ET on March 2.

Check back with FierceWireless for continuing AWS-3 auction coverage.

For more:
- see this FCC page
- see this FCC public notice
- see this FCC list of winning bidders

Related Articles:
IT'S OVER: FCC's AWS-3 spectrum auction ends at record $44.9B in bids
As AWS-3 auction winds down, attention turns to what happens next
Analysts: Bidding in NYC, LA and Chicago in AWS-3 auction is 94% above average prices
AWS-3 auction inches on, with bids passing $43.7B
FCC moves to next stage of AWS-3 auction as bids climb toward $42B

Reports: Microsoft to invest in startup Cyanogen, which wants to disrupt Google’s control of Android

Microsoft (NASDAQ: MSFT) is considering an investment in mobile startup Cyanogen, according to multiple reports. Cyanogen is seeking to chip away at Google's (NASDAQ: GOOG) control over the Android mobile platform by offering a modified version of the software.

According to reports from the Wall Street Journal and Bloomberg, which each cited unnamed sources, Microsoft is in talks to become either a backer or partner of Cynaogen. The reports differ on the details of how Microsoft and Cyanogen might work together though. Microsoft and Cyanogen declined to comment, according to the reports.

The WSJ reported that Microsoft would be a minority investor in a roughly $70 million round of equity financing that values Cyanogen in the high hundreds of millions of dollars. The report said the financing round could grow with other strategic investors that have expressed interest in Cyanogen because they also want to weaken Google's control over Android. Prior investors in Cyanogen include Benchmark Capital, Redpoint Ventures, Andreessen Horowitz and Chinese social networking company Tencent.

Meanwhile, Bloomberg reported that Microsoft wants to work with Cyanogen to create a version of Android that's friendlier to Microsoft services. Before Microsoft purchased Nokia's (NYSE:NOK) devices business, Nokia had created a series of phones based on a  modified version of Android that featured Microsoft services including Skype and One Drive, but Microsoft scrapped those phones in 2014 after its purchase of Nokia's phone business closed.

Bloomberg said Microsoft may invest in Cyanogen and strike a commercial partnership, and that the companies are discussing deal terms but Microsoft hasn't committed to an investment. Cyanogen is raising a round of financing that could value it at around $500 million, Bloomberg reported.

Microsoft supports its own Windows Phone platform for phones, but only has around 3 percent market share globally.

Cyanogen offers features and options not found in the official firmware distributed by Android device vendors. Cyanogen takes the Android source code and modifies it to let users customize the user interface. In the same way that Amazon (NASDAQ: AMZN) has modified the Android Open Source Project for its Kindle Fire tablets and Fire phone, and created its own application ecosystem, Cyanogen wants to create an alternative to Google's version of Android and the Google Play store. Such forked or modified versions of Android are also popular in China. Google is trying to counter that trend with its Android One program, which seeks to bring low-cost Android phones with up-to-date software and Google services to consumers in emerging markets.

Although Google distributes Android for free as part of an open-source project, it exerts control over the look and feel of Android phones that run Google services like Search and Maps. Part of that effort can be glimpsed in the "Mobile Application Distribution Agreements" OEMs have signed with Google, which require manufacturers to make Google Search the device's default search engine. The agreements even require placement of Google apps in certain locations on the device, such as having its Play Store icon "immediately adjacent" to the home screen.

Google is facing an antitrust suit that claims the company forces its Android hardware partners to use Google Search, Maps and other services as default applications. Such restrictions in Android mean that for companies like Microsoft, users get less exposure to its Bing search engine and other mobile services.

Cyanogen's modified version of Android lets companies get around those restrictions. The firm also claims to have a volunteer army of 9,000 software developers working on its own version of Android, according to the WSJ.

"We're going to take Android away from Google," Cyanogen CEO Kirt McMaster told the Journal in a brief interview last week. The next day, at an industry event sponsored by tech website The Information, McMaster said Cyanogen had raised $100 million to date; previously the company had disclosed that it raised $30 million of funding. McMaster also said more than 50 million people use a version of the Cyanogen version of Android, most of whom have installed it in place of their phone's initial operating system.

Cyanogen is also working on deals with hardware makers to install the software on their devices, and it recently inked a deal with Indian smartphone maker Micromax to ship phones with Cyanogen's software. Cyanogen has also worked with OnePlus to ship its software in the company's One smartphone.

For more:
- see this WSJ article (sub. req.)
- see this Bloomberg article 
- see this Ars Technica article
- see this Business Insider article

Related Articles:
Google seeks to toss out antitrust lawsuit over default Android apps
New Google antitrust suit over Android could provide ammo to Microsoft, Oracle
Google pushes to dismiss U.S. antitrust suit targeting its Android practices
Analysts: 30% of Android phones in 2015 won't access Google services
Google documents reveal stipulations on Android phone makers accessing Google services