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EchoStar Ally Bids Hard on New Airwaves

A company nearly half-owned by EchoStar Communications Corp. was the most aggressive bidder in a spectrum auction launched last Wednesday by the Federal Communications Commission.

The company, South.com LLC, committed $17.9 million to become the high bidder for 38 licenses. EchoStar owns 49.9% of South.com, but it's controlled by Denver businesswoman Phanie Sundheim, according to FCC records.

South.com appeared to be pursuing a big-market strategy. It was the top bidder for licenses in New York, Chicago, Boston, Atlanta and San Francisco.

The second-highest bidder was DTV Norwich LLC, which bid $10.9 million to gain control of 38 licenses.

The results reflected bidding after seven rounds last Thursday afternoon. All bids produced total commitments of $38.6 million. Some observers have put the value of the spectrum at $100 million.

The FCC is selling rights to 214 local spectrum blocks to entities that plan to offer video programming and high-speed Internet access using terrestrial transmitters.

The FCC calls the service Multichannel Video and Distribution and Data Service (MVDDS). MVDDS shares the same frequencies with direct-broadcast satellite providers.

Fourteen companies or individuals are bidding in the auction.

No bids were placed for 49 licenses. An FCC spokesman said the FCC retains licenses that aren't auctioned.

At least since January 1999, Northpoint Technology Ltd. urged the FCC to grant it a national MVDDS license for free, in recognition of the company's spectrum-sharing patents.

EchoStar and DirecTV Inc. fought Northpoint, saying that the spectrum should not be awarded for free and that spectrum sharing would lead to signal interference and hurt reception for millions of DBS subscribers.

The FCC bought the auction idea, but determined MVDDS and DBS could co-exist without harmful interference.

Northpoint is not participating in the auction.

Northpoint — which had lobbied Congress heavily — recently closed its Washington, D.C. office. Calls to that office were routed to the New Hampshire office of Northpoint president Sophia Collier.

Collier said she decided to discontinue lobbying Capitol Hill for favorable legislation. Northpoint, she said, will continue to pursue litigation against the FCC for staging the auction.

"We think the FCC has made a mistake going ahead with the auction, and it will be overturned on appeal," Collier predicted.

Two Northpoint MVDDS patents were invalidated by a federal court, but the company is appealing that ruling. Northpoint has other patents that could be licensed to FCC auction winners. But Northpoint is ready to go to court if FCC auction winners intend to infringe on their patents.

"We'll probably be locking horns with some of these people," Collier said.