The Federal Communications Commission is set to begin its second wireless spectrum auction of the year this week, with 70 bidders officially qualified to participate in Auction 97.
Those participants will be throwing money at a total of 65 megahertz of spectrum in the 1.7/2.1 GHz bands – also known as the advanced wireless services-3 band – with 50 megahertz set aside in paired bands typically used by mobile operators. The paired licenses will include three 5×5 megahertz licenses and a single 10×10 megahertz license, parsed into G-, H-, I- and J-Blocks. The G-Block will include a total of 10 megahertz, commercial market area-sized licenses, which would include 734 total licenses covering the country. The remaining blocks will be economic area-sized. The 15 megahertz of unpaired spectrum will be split into two licenses, one with five megahertz of total spectrum parsed out on an EA basis, while the other will include 10 megahertz of spectrum also in an EA configuration, which will total 176 licenses per block covering the country.
Auction rules will follow recent proceedings, with multiple rounds conducted per day, speeding up as the number of bids subside. Bidding on a license will close once a license has not received a new bid in five consecutive rounds and has surpassed its reserve price. Bidder identities will also be kept confidential until after the auction concludes.
The FCC recently set a reserve price of more than $10 billion for the 1,614 total licenses being put up for bid. The paired spectrum has an aggregate reserve price of $10.07 billion, while the unpaired licenses will require at least $580 million in total bids. Minimum opening bids for the paired licenses will be based on a formula of 15 cents per-megahertz/per-potential customer covered, with the unpaired licenses based on a 5 cents per-megahertz/pop. The FCC managed to generate nearly $13.9 billion in winning bids during the AWS-1 auction conducted in 2006, which included 90 megahertz of spectrum in the 1.7/2.1 GHz bands.
The FCC noted in mid-May that there would not be any limitations on bidding activity for the AWS-3 spectrum, which followed an announcement that it planned to limit participation in next year’s planned 600 MHz incentive auction. The Auction 97 free-for-all is expected to drive considerable competition from larger mobile operators looking to bolster their mid-range spectrum holdings, which are seen as key to providing much-needed network capacity in larger markets.
Larger players expected to dominate
The paired spectrum up for bid in Auction 97 sits adjacent to the AWS-1 band that is used by Verizon Wireless and T-Mobile US for their LTE services. AT&T Mobility is also looking to add support to its LTE network through the 1.7/2.1 GHz band.
Sprint was the only nationwide operator to not be included on the list of participants, which followed its recent announcement that it did not plan on participating in the proceedings. Sprint does not currently control any spectrum in the advanced wireless services band, with its current holdings focused in the 800 MHz, 1.9 GHz and 2.5 GHz bands. Most analysts noted it made little sense for Sprint to partake in the AWS-3 auction because it would need to integrate a fourth band into its operations and the carrier has recently announced plans to conserve cash where it can. Sprint did say it was looking forward to next year’s 600 MHz incentive auction.
Dish, which had previously stated plans to participate in the proceedings, picked up 10 megahertz of nationwide spectrum earlier this year in the H-Block auction. Dish Network has yet to launch commercial services using its own spectrum holdings, which include licenses in the 700 MHz, 1.9 GHz and 2 GHz bands, but has been rumored to be looking for a network partnership with just about every established mobile operator. Dish has recently launched mobile broadband services using 2.5 GHz spectrum in partnership with Sprint and regional operator Ntelos.
Rural and regional wireless carriers attending the recent Competitive Carriers Association event in Las Vegas appeared reserved on the AWS-3 auction, with most seeming more focused on the 600 MHz auction.
RCR Wireless News will provide extensive daily coverage of the auction proceedings.
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