February 2, 2015 – AT&T was the bigger spender in the FCC’s AWS-3 auction, spending $18.2 billion toward owning 251 licenses or 15.5 percent of the total licenses in the auction. AT&T concentrated on the spectrum in the J Block, purchasing licenses that cover 179 million POPs, including New York City, Chicago, Dallas, Boston, Houston, Atlanta and Miami, according to statistics provided by Wells Fargo Securities.
AT&T will start to deploy the spectrum beginning in the 2017-2018 period. The spectrum is expected to be used as a supplemental downlink to deliver additional mobile Internet capacity and better performance for its customers. AT&T will work with the FCC, NTIA, DOD, and other federal agencies to also support uplink capacity as soon as possible.
A distant second in the auction was Verizon, which bid $10.4 billion on 181 licenses or 11.2 percent of the total licenses in the auction. These licenses are in markets covering 192 million POPs, or 61 percent of the United States. The carrier is reportedly close to completing a deal to sell its towers, ostensibly to pay for its spectrum bill.
“AT&T had a big number, yes — but not a huge surprise,” Jennifer Fritzsche, Wells Fargo senior analyst, wrote. “Verizon was a lot less aggressive than we thought. We note this amount [$14.4B] was significantly less than speculation (which had been in the mid- to high teens).”
T-Mobile, the other major carrier that bid, spent $1.8 billion on 151 licenses, or 9.4 percent of the total licenses in the auction. Although Sprint did not bid, the prices fetched at auction make its spectrum cache worth $54.5 billion, according to Wells Fargo statistics.
Dish Networks Kicks Up a Ruckus (and snags a lot of spectrum)
Two companies in which Dish Network had invested, SNR Wireless LicenseCo and Northstar Wireless, bid $13.3 billion. Using the FCC’s Designated Entity rules, the companies received bidding credits of $3 billion, which infuriated some. But together the two companies outbid Verizon Wireless!
Northstar and SNR Wireless won 345 licenses and 357 licenses, respectively, covering a combined 972 million POPs. The companies dominated bidding in the A1 and B1 blocks and also won licenses spread out across the G, H and I blocks. This will add a lot of spectrum to Dish’s ample supplies in the AWS-4 band, AWS-4 bands, which consist of spectrum in the 2000-2020 MHz bands paired with 2180-2200 MHz bands purchased from TerreStar and DBSD in 2011.
It is no secret that Dish has designs on being a wireless carrier, having tried to buy Sprint (a failed $25.5 billion takeover bid). Whether you agree with how they got the spectrum, or not, it is hard to ignore this would-be wireless carrier.
Auction Brought Historic Bids
The bidding in Auction 97, which completed Jan. 29, brought in a whopping $44 billion, the highest-earning spectrum auction in history. ¬¬That also raised some some eyebrows. The auction of 65 megahertz of spectrum, which will be used for wireless broadband, lasted 77 days and was predicted to total between $18 billion and $25 billion in bids.
“Some experts opine that the winning bid total is due in large part to bidding and other competitive strategies unique to this band,” said FCC Commissioner Mignon Clyburn. “I believe one of the key factors for this unanticipated level of activity is that the AWS-3 bands are near the AWS-1 bands, and there are already base stations and other equipment available.”
Several entities were earmarked to receive proceeds from the sale, including $7 billion for FirstNet; $300 million for public safety communications research; $115 million in grants for 911, E911, and NextGen 911 implementation; and more than $20 billion for deficit reduction.
The total valuation of the spectrum was estimated to be $2.21/MHz-POP (including paired and unpaired spectrum), and $2.76/MHz-POP for the paired spectrum blocks (J, I, H blocks), according to Wells Fargo Securities.
In March 2014, the FCC allocated spectrum in the 1695-1710 MHz, 1755-1780 MHz and 2155-2180 MHz bands, collectively known as AWS. The winners will need to coordinate with federal incumbents.
“Five years ago, many people doubted that we would succeed in making AWS-3 spectrum available. It is because of dedication, hard work and compromise that a variety of government and industry stakeholders came together to develop a solution that made much of this spectrum newly available for commercial use,” said Roger Sherman, chief of the FCC Wireless Telecommunications Bureau.