U.S. wireless companies face new competition on Wednesday as they start bidding on licenses for advanced wireless services like high-speed Internet - from the satellite and cable television industries.

The U.S. Federal Communications Commission will auction 1,122 licenses that analysts predict may raise $15 billion and last several weeks. The 168 bidders, including the top cable and satellite providers, have made $4.3 billion in deposits.

That appears to indicate strong industry interest in the spectrum, though some of the parties may be more serious than others, Stifel, Nicolaus & Co. analysts said in an August 4 research note.

Wireless companies are eager for additional airwaves as they expand new offerings like video service and high-speed Internet access. Companies reported an eight-fold jump to more than 3 million subscribers in the last six months of 2005.

The sale comes as telecommunications and television providers are battling to attract consumers to a package of voice, Internet and video services, including wireless. Some consumers are also moving away from traditional phone service.

The auction of 90 Megahertz (Mhz) of spectrum will kick off on Wednesday with two rounds of bidding and expand to three rounds on Thursday and subsequent business days until there are no new bids or activity.

There is some risk that the sale could fall short of predictions because some bidders may prefer to wait for airwaves television broadcasters are giving up in 2009. That spectrum is seen as more desirable because it transmits further and can more easily penetrate walls.

MEDIA COMPANIES IN THE GAME

The biggest downpayment, $972.5 million, came from a joint venture of U.S. satellite television rivals, DirecTV Group Inc. and EchoStar Communications Corp. but also includes media conglomerate Liberty Media.

It was followed by $637.7 million from a group of cable operators -- including the top two Comcast Corp. and Time Warner Inc. -- that have joined forces with No. 3 wireless carrier Sprint Nextel Corp..

We are surprised with the strong interest from the satellite and cable (with Sprint) companies, said Bear Stearns analyst Phil Cusick in a July 31 research note. The companies have not disclosed details of their plans if they win.

The auction is especially critical for No. 4 U.S. carrier T-Mobile USA, a unit of Germany's Deutsche Telekom AG, because it does not have as much spectrum. The company put down $583.5 million.

We expect T-Mobile USA to bid aggressively for spectrum in several of the major markets (especially New York) as it has less spectrum than the other national wireless carriers, Exane BNP Paribas analyst Stuart Birdt said in a research note.

He estimated that the carrier had about 25 Mhz of airwaves in the top 25 markets but only 20 Mhz in New York, less than half compared to the three bigger carriers.

Other qualified bidders include No. 1 provider Cingular Wireless, a joint venture of AT&T Inc. and BellSouth Corp., and Verizon Wireless, the No. 2 carrier. It is a venture between Verizon Communications and Vodafone Group Plc.

Another bidder drawing attention is money manager Mario Gabelli. He and 38 affiliates agreed last month to pay $130 million to settle a government probe into whether they improperly took advantage of discounts offered to smaller bidders in past FCC wireless auctions. He denied wrongdoing.

Gabelli, who heads the $28 billion asset management group Gamco Investors Inc., has ties in the upcoming sale to the venture Lynch AWS Corp., which has paid a $1.5 million downpayment.

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