In total, 80 potential bidders have submitted both complete and incomplete applications to participate in Auction 97. In addition to the big name players, smaller carriers like Guam-based Docomo and Bluegrass Wireless have thrown their hats in the ring. But four competitors stand out from the rest.
The AWS-3 auction will kick off on Nov. 13 and will offer up 65 MHz across 1,614 total licenses. The available bands cover 1695-1710 MHz, 1755-1780 MHz, and 2155-2180 MHz. The bands are divided into six blocks: one 5 MHz, four 10 MHz, and one 20 MHz.
The 5 MHz (1695-1700 MHz) block and one of the 10MHz (1700-1710 MHz) blocks are unpaired. The G Block is 10 MHz paired (1755-1760/2155-2160 MHz) and it’s broken up by Cellular Market Areas (CMA) into 734 licenses, making it a likely target for rural and regional carriers looking to bolster holdings over relatively small market areas.
The final two paired 10 MHz blocks (1760-1765/2160-2165 MHz and (1765-1770/2165-2170 MHz) and the paired 20 MHz block (1770-1780/2170-2180 MHz) could prove the most attractive to AT&T and Verizon, the two heavyweights with nationwide network dominance and leading subscriber shares to protect.
Phil Marshall, chief research officer at Tolaga Research, sees the spectrum as valuable to any bidder but in particular to carriers with ongoing AWS deployments. The spectrum up for grabs in November is close enough in compatibility so carriers currently running AWS networks won
’t have to worry about dual-band technology even though some network infrastructure replacement will be required to bring AWS-3 to market.
But for others without AWS deployments, bidding could serve as a way to keep spectrum from falling into competitors’ hands.
“It’s not only how much spectrum they’re targeting. They’re also trying to ensure the others don’t acquire a disproportionately large amount relative to them as well,” Marshall said.
It’s all available to the highest bidder and there’s a good chance AT&T, Dish Network, T-Mobile and Verizon Wireless will attract the most attention and potentially walk away with the most spectrum. Sprint, as it previously promised, will not be participating in the auction—which makes sense as it doesn’t currently have any AWS holdings.
Before it all goes down next month, let’s take a look at the four title shot contenders, complete with Mosaik Solutions maps to highlight what they already have and sound reasoning why they’ll be fighting for more.
Of all the major carriers AT&T has the most sporadic AWS footprint, including no AWS coverage whatsoever in Dallas and Atlanta, its big headquarters cities.
AT&T has numerous holes to fill in its nationwide AWS coverage. The carrier wants to use carrier aggregation (CA) to tie its AWS and PCS holdings to the supplemental downlink deployment it has planned for the 700 MHz D and E Block spectrum it bought from Qualcomm. More AWS for CA would mean even more capacity and speed for its customers.
Besides the domestic implications, AT&T could be considering the overseas impact of securing AWS-3 spectrum. Recon Analytics’ Roger Entner said that AWS-3 is special because it’s the only global roaming band for 4G, making it more attractive to carriers that are already up and running and banking sweet roaming deals. That could provide AT&T, Verizon and potentially T-Mobile more than enough incentive to push ahead of Dish in the auction.
To that end it is likely AT&T will be after 20 MHz at least in this auction. BTIG analyst Walter Piecyk said that’s probably the amount Verizon will be after as well but since there’s enough available so both carriers could score a 10×10 MHz block (one paired and one unpaired), it’s possible they’ll try to stay out of each other’s way.
“It would seem more logical for companies that generate 80 percent of the profits of the industry to just move to their own respective corners and bid on different blocks to they don’t drive up the price,” Piecyk said.
Dish Network almost doesn’t need a map for its AWS spectrum footprint. It’s just 40 MHz (2000-2020 MHz and 2180-2200 MHz) of AWS-3 everywhere in the U.S.
The vicinity of Dish’s upper AWS-3 holdings to part of the 20 MHz paired AWS-4 up for grabs could pique Dish’s interest, purely for the shot at contiguous holdings. But Dish could be more interested in leveraging a November spectrum win toward long-term partnership prospects.
Entner said that Dish buying AWS-3 spectrum would be mostly speculative but he said a strong performance from the satellite-TV provider here would definitely enhance its M&A prospects with established carriers.
“It would give them a lot more bargaining power if they were to negotiate with somebody,” Entner said. “Especially if they win a major market.”
Dish did reveal it has formed joint bidding agreements with Northstar Wireless and SNR Wireless—Dish has indirect ownership in both companies. But Piecyk doesn’t think those agreements give it a leg up on competition like AT&T and Verizon, although it could potentially give rise to fixed mobile broadband agreements similar to what Dish already has in place with nTelos and Sprint.
T-Mobile’s AWS footprint ranges from extremely robust holdings in major markets to very little in the middle of nowhere—in other words, right in line with the carrier’s current focus on blinding fast LTE in metro areas and Wi-Fi calling everywhere else.
Even though T-Mobile already has the AWS to achieve the 20×20 MHz “Wideband LTE” deployments it swore will be in “several” major markets by the end of the 2014, Piecyk believes the carrier will maintain its focus on secondary market transactions geared toward beefing up its low-band spectrum holdings.
“We’re not expecting them to walk away with a nationwide spectrum position,” Piecyk said of T-Mobile’s involvement with the AWS-3 auction, adding it’s likely to save its pennies for the 2015 incentive auctions.
Earlier this year, T-Mobile paid $2.4 billion and gave some AWS and PCS licenses to Verizon in exchange for a chunk of 700 MHz A Block spectrum, and Piecyk believes 700 MHz will remain T-Mobile’s priority for the time being.
Verizon’s fairly consistent mixture of 40 MHz and 20 MHz AWS holding across most markets has already been put to highly-promoted use at XLTE. But as the first nationwide carrier to substantially complete its initial LTE buildout and then experience a capacity crisis, Verizon won’t likely be content sitting on what it has.
Entner said, from just a spectrum efficiency perspective, it would be wise for Verizon and the other established players to focus on the 20 MHz block, which would provide much more capacity and speed.
That’s the case for both Verizon and AT&T. Piecyk said there’s a chance one or both of them might get greedy and decide, since they have 100 million customers, that they need to walk away with 30 MHz or 40 MHz. But he said ultimately they will likely settle for 20 MHz each and not stepping on each others’ toes.
Of course, under the assumption that’s what Verizon and AT&T will do, there’s could be a fly in the ointment.
“[Dish Chairman Charlie Ergen] is aware of that might not necessarily allow it to happen as neatly and cleanly as those operators want,” Piecyk said. “But that’s what will make the auction interesting to watch.”
Filed Under: Industry regulations