AWS-3 Spectrum Bids Surpass $16.4 Billion

by Istvan Fekete on November 20, 2014

After 15 rounds, the AWS-3 spectrum auction has netted $16.4 billion in bids, meaning that the most valuable spectrum licences have met the reserve price the FCC set ahead of the auction.

The most fierce competition continues to be around licences in the New York City metropolitan area, Los Angeles, Dallas, San Francisco, Philadelphia, and Boston. While the identities of the bidders are confidential, analysts following the 15 rounds say the heaviest bidders are Verizon Wireless, AT&T, and T-Mobile, and finally Dish Network as a wildcard.

The cumulative price of $10 billion for the AWS-3 paired spectrum licences was reached during round 12, Jefferies analysts declared. The paired spectrum in the auction runs from 1755–1780 MHz for uplink operations and 2155–2180 MHz for downlink.

The AWS-3 auction consists of two sub-bands of spectrum:

– One of the sub-bands consists of one unpaired 5 MHz block (1695-1700 MHz) and one unpaired 10 MHz block (1700-1710 MHz), licensed in EA geographies.
The other sub-band consists of paired spectrum. It includes one 5×5 MHz block (1755-1760 and 2155-2160 MHz) licensed in Cellular Market Area (CMA) geographies.

– There are also two 5×5 MHz blocks (1760-1765 and 2160-2165 MHz, and then 1765-1770 and 2165-2170 MHz) licensed in EA geographies. And finally there is one 10×10 MHz block (1770-1780 and 2170-2180 MHz) licensed on an EA basis.

Looking at the current status of the auction, analysts have thrown in different explanations: JP Morgan’s Philip Cusick, for example, says that rising prices are bad for T-Mobile, which decided to back off as prices rose.

TMF Associate analyst Tim Farrar guesses that Dish is actively bidding and pushing up the prices of the paired spectrum. He based his guesses on the assumption that by now the incumbent players would have sorted themselves out and bid on self-selected subsets of licences. But from where the bidding is heading, it appears that Dish has been bidding simultaneously across all the main licences in key areas, so major operators will need to pay a higher than expected price for the targeted licences.

According to Farrar, the longer the bidding goes on, the more potential there is for incumbents to call Dish’s bluff. If the latter wins the licences, it might want to sell them to other carriers. So, Dish is playing hard and might come out as a winner, but only if it gets a guarantee that AWS-3 spectrum will be interoperable with its existing and nearby AWS-4 spectrum holdings.

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Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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