UPDATED: St. Louis Rams license 700 MHz spectrum

Mike DanoU.S. Cellular's bidding partner, King Street Wireless, recently leased to the St. Louis Rams football team the 700 MHz spectrum license for the city of St. Louis in a deal set to expire in 180 days. According to FCC filings, the Rams will use the spectrum for "a private communications service for the St. Louis Rams professional football games at the Edward Jones Dome at America's Center in St. Louis City." Details, including the financial terms of the transaction, were not disclosed.

During the FCC's 700 MHz auction in 2008, King Street spent a total of $400 million on 152 licenses in locations across the country. It purchased the St. Louis license for $61 million. King Street is a "general partnership" in which U.S. Cellular is a "sizable, non-controlling limited partner," according ot King Street. According to FCC documents, U.S. Cellular is the indirect owner of 90 percent of King Street.

Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T) were the big bidders during the FCC's 700 MHz auction, and are using their respective spectrum holdings to deploy LTE network technology. 700 MHz airwaves have been heralded as beachfront property due to the band's propagation characteristics (meaning, signals can go really far, and into buildings).

And that's what makes the spectrum so valuable. Indeed, the government's 700 MHz spectrum auction in 2008 raised almost $20 billion for the U.S. treasury.

What's interesting, though, is how King Street appears to be using its spectrum. U.S. Cellular--the nation's sixth-largest wireless operator with 6.1 million subscribers--has said it plans to deploy a large-scale commercial LTE network by 2012. Thus, the duration of King Street's lease to the Rams--180 days, or about the length of the football season--appears to allow King Street to make use of idle spectrum ahead of U.S. Cellular's planned launch of LTE, which likely will leverage King Street's 700 MHz spectrum holdings.

(Indeed, U.S. Cellular may take a delayed approach to the St. Louis market specifically due to Verizon's plan to launch LTE in the city sometime this year.)

One question remains: What exactly will the St. Louis Rams do with prime 700 MHz real estate? Are they planning some kind of awesome LTE-powered video-streaming service for fans attending games? Game Day, the entity representing the Rams in the transaction, declined to provide details.

It's hard to say. However, the news does serve to again shine a light on the vast, shady, complex and often fascinating world of after-auction, spectrum-license horse trading. --Mike

Article updated Nov. 22 to incorporate additional commentary from King Street.

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