T-Mobile & Dish Networks Dominate $19.8B FCC Auction
T-Mobile US Inc bid $8 billion while Dish Network Corp bid $6.2 billion to win the bulk of broadcast airwaves spectrum for sale in a government auction, the U.S. Federal Communications Commission said on Thursday.
The two carriers accounted for most of the $19.8 billion in winning bids, the FCC said. Comcast Corp agreed to acquire $1.7 billion in spectrum, AT&T Inc. bid $910 million and investment firm Columbia Capital offered $1 billion. It wasn’t immediately clear what Comcast and Dish plan to do with the airwaves. Comcast said earlier this month it would start selling cellphone service to its home internet customers, and the service runs off the back of Verizon’s network. Dish has been amassing a trove of wireless airwaves for years that it has yet to put to use.
The complex FCC reverse auction invited television broadcasters to sell their airwaves with opening prices provided by the government. Those bids fell until the agency got the licenses it needed at the lowest possible price. Then, the FCC sold those airwaves to companies that wanted them for cellular service. The FCC said that 175 broadcast TV stations were selling airwaves (spectrum) to 50 wireless and other telecommunications companies. Companies plan to use the spectrum to build new wireless networks or improve existing coverage.
The spectrum auction’s end is widely expected to kick off a wave of deal-making in the telecom industry. Until now, companies participating in the auction have been restrained by a quiet period, but that will end after April 27, when down payments are due from auction winners.
T-Mobile said its $8 billion winning bid would enable it “to compete in every single corner of he country.” The company, controlled by Deutsche Telekom AG , said the investment will quadruple its low-band holdings.
Verizon Communications Inc. and AT&T Inc., the nation’s largest wireless carriers by subscribers, largely sat out this FCC auction, which began last year. AT&T offered $910 million for the licenses, while Verizon declined to bid.
The FCC sale included one tier that could be bought by anyone and a “reserve” tier of low-band airwaves was set aside for companies that didn’t already own a significant amount of them.
The rule largely prevented AT&T and Verizon from bidding on the reserve tier and also restricts most sales by the winning bidders to AT&T or Verizon. Even though Verizon didn’t buy any spectrum at this FCC reverse auction, the company said it was confident in its network position.
The airwaves are particularly important for T-Mobile, which until recently held almost no low-band frequencies. As a result, its network has suffered in buildings and rural areas.
AT&T and Verizon have more recently spent billions of dollars securing rights to higher-frequency spectrum that they hope will be useful in ultra-fast networks still being developed.
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The FCC noted the 600 MHz incentive auction generated nearly $7 billion for the U.S. Treasury for deficit reduction; more than $10 billion of the proceeds will go to broadcasters that chose to relinquish spectrum usage rights; and up to $1.75 billion for other broadcasters that incur costs in changing channels.
Television broadcasters that gave up their spectrum holdings as part of the auction’s reverse bidding process are now on the clock to give up those licenses over the next 39 months. That timing would put full spectrum availability into early 2020, or about the time most expect commercial “5G” services to be coming on air.
Initial 5G deployments are expected to focus on higher band spectrum licenses in the 3.5 GHz band as well as millimeter wave bands higher than the 15 GHz band. These bands are set to include broad swaths of spectrum support in order to meet the expected capacity needs of 5G services.
However, broader coverage will require lower spectrum bands. Many see 5G deployments relying heavily on current LTE deployments using low-band spectrum in order to meet coverage demands, with the 600 MHz spectrum able to bolster the supply.
FCC Chairman Ajit Pai applauded the proceedings, which began under his predecessor Tom Wheeler, but noted hard work remained.
“Today marks a major accomplishment for the commission: the ‘auction’ portion of the world’s first incentive auction is officially over,” Pai said in a statement. “The reverse and forward auctions have concluded and the results have been announced. But this process is far from over. Now, we begin the post-auction transition period. This day has been a long time coming. We congratulate all bidders who were successful in the incentive auction, and we applaud all of those past and present commission staffers who worked so diligently on every aspect of this complex undertaking. We have only reached this point because of their tremendous skill and dedication to this groundbreaking endeavor. Again: While we celebrate reaching the official close of the auction, there is still much work ahead of us. It’s now imperative that we move forward with equal zeal to ensure a successful post-auction transition, including a smooth and efficient repacking process.”
References:
http://ca.reuters.com/article/businessNews/idCAKBN17F2CJ-OCABS
https://www.wsj.com/articles/fccs-tv-airwaves-auction-drew-19-8-billion-led-by-t-mobile-1492110623