Before you can run, you have to crawl.
That is, you can’t run off with your precious, hard-won spectrum before crawling to the finish line along with your auction-weary competitors in the advanced wireless services auction.
The auction limped on last week like an Energizer bunny with inferior, nearly spent batteries, as the bidding rounds grew shorter and more numerous to sell off the last crumbs–a variety of small spectrum blocks. By last Friday, the number of bids per round had slowed into the single digits, with most of the activity centered on licenses in Alaska.
Of all the players, perhaps T-Mobile USA Inc. is most anxious for the auction to end so it can briskly move ahead on its plans to build a next-generation network and credibly compete with the other Tier 1 carriers. Other, more well-off spectrum holders such as Verizon Wireless and Cingular Wireless L.L.C. are likely stockpiling their portfolios for well-considered future uses, while Sprint Nextel Corp. and its cable company partners have yet to tip their hands.
Nearly $13.7 billion had been raised by the end of round 151, at least theoretically, for the U.S. Treasury. Not bad for “air”–it compares favorably with last week’s pay stub, but admittedly represents a drop in the perforated federal revenue bucket that bleeds billions every day.
The auction action, as it were, may be increasingly excruciating for all the bidders, whose future fortunes depend, in part, on actually securing the spectrum they’ve bid on. None of the players can say they’ve succeeded in obtaining that spectrum until the FCC declares the auction over, which is when no further bids are made.
By the end of last week’s last round, T-Mobile USA had bid nearly $4.2 billion, the most of any player–well over $1 billion more than its closest rival–and more than one-quarter of the auction’s total thus far. The carrier needs the precious spectrum to build out a next-generation network and increase its footprint. Indeed, its competitors are already moving ahead, Cingular with HSDPA and Verizon Wireless and Sprint Nextel Corp. with CDMA2000 1x EV-DO. Roger Entner at Ovum recently suggested that T-Mobile USA would opt for HSDPA as well to facilitate international roaming agreements.
Meanwhile, Verizon Wireless and Cingular both stocked their shelves over the course of the auction by buying spectrum to increase their networks’ capacity and reach, though analysts have said that neither has to decide quickly what to do with their spectrum booty.
Verizon Wireless appeared to have secured choice 20-megahertz F-block licenses in the highly populated Northeast (price tag of $1.3 billion), Southeast and Great Lakes regions by spending a total of $2.8 billion on high bids. Sprint Nextel and its cable cohorts had plunked down high bids totaling nearly $2.4 billion, with a cool half-billion dollars going to a 20-megahertz B-block chunk in New York. MetroPCS Communications Inc. had high bids of about $1.4 billion to extend its footprint and Cingular was set to pay $1.3 billion for its competitive plans.
The real story, of course, will unfold in the months and years to come as the auction players make moves in the real world. For now, they’ve got to crawl before they can run.
