As AWS-3 auction passes $44.5b, T-Mobile petitions FCC to protect even more 600MHz spectrum in 2016 auction

As AWS-3 auction passes $44.5b, T-Mobile petitions FCC to protect even more 600MHz spectrum in 2016 auction
T-Mobile is not just aggressive in the market place, but it has been squeezing the best bang-for-the-buck with its lobbying efforts at the Federal Communications Commission.

The bidding in the AWS-3 spectrum auction is still ongoing, but it is slowing down, and when the bidding stops, so does the auction. What an auction is has been thus far too! Bids have accumulated to over $44.5 billion in 139 rounds.

Bidding activity has varied by round and licenses up for grabs at any given point, so it is difficult to gauge when things will settle down. For example, in the latest round of bidding (round 139), $29.8 million was committed. In round 138, only $1.5 million. In the round prior to that, bidding reached $18.8 million. Of course, some markets command more money than others if a carrier wants to make inroads in a particular area.

For those watching from the outside, this spectrum is attracting far more investment than anyone thought. If these licenses (spectrum blocks in 1695-1710MHz, 1755-1780MHz, and 2155-2180MHz) attracted half as much interest, they would have exceeded initial estimates. That means it is a fair bet that the 600MHz auctions set for 2016 could bring in substantially more revenue.

AT&T and Verizon are no doubt the big players in this current auction, even though the FCC does not report active bidders.  The two large carriers are expected to be the deep pockets in 2016 as well. However, the arguments have been made that the big wallets of AT&T and Verizon put them in a position to graft all the other players out of the game, and T-Mobile was successful in getting the FCC to adopt rules that would set aside 30MHz of spectrum so that the “big two” could not dominate any single market.

However, unlike the current AWS-3 auction, the rules for the 2016 spectrum sale are far more complex because it requires that the current holders of that spectrum, almost exclusively television broadcast companies, willingly put their licenses up on the auction block. If a broadcaster only gives up 50 or 60MHz of spectrum, then the auction set-aside for smaller companies is only 10 or 20MHz.

For the smaller companies to even begin bidding on the reserved blocks, bidding will need to have reached $1.25-per-MHz-POP in the largest markets first. T-Mobile argues that this model would actually discourage participation and lower overall revenues. That would motivate broadcasters to not sell their licenses at all.

Despite the new rules written in earlier this year, T-Mobile is continuing its efforts to have the FCC “protect” even more spectrum in the next auction, saying that 30MHz is not enough for the smaller companies to bid on and that AT&T and Verizon could still grab the rest of available spectrum and continue their respective market domination.

T-Mobile’s filing with the FCC makes some interesting observations, but the fact remains that no matter how restricted AT&T and Verizon are in the auction, they are still the players with the deepest pockets in the room. Using the 700MHz spectrum auction in 2008 as a yard-stick, AT&T and Verizon have more purchasing power than the other bidding companies combined four-times over.  Having seen the writing on the wall for 2016, is it possible that Big Red and AT&T quietly changed their strategy behind the rhetoric?

These spectrum auctions, and the 2016 auction in particular, are meant for carriers to acquire and expand their network capacity and services. They are also intended to reimburse the current license holders, and fund FirstNet, a congressionally mandated national wireless broadband network for first responders.


sources: FCC (1, 2) via FierceWireless

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11 Comments

1. Planterz

Posts: 2120; Member since: Apr 30, 2012

T-Mobile had better be going balls-out on this auction and win no matter how high the bidding goes. Low frequency spectrum and coverage is the last hurdle to become a major force against the AT&T/Verizon duopoly.

3. lsutigers

Posts: 832; Member since: Mar 08, 2009

They will have to compete with the big 3 for the 600mhz spectrum as Sprint / SoftBank already mentioned they are going balls deep on this auction.

6. Planterz

Posts: 2120; Member since: Apr 30, 2012

Come to think of it, I wonder if T-Mobile can even afford to bid as much as this auction is at. Wasn't the Sprint buy-out like $32 billion or something?

2. robert26101

Posts: 107; Member since: Mar 21, 2014

T-Mobile is such a cry baby.

11. TerryTerius unregistered

Yes. Trying to ensure fair competition is something only whiners would do. Everyone knows you're supposed to shut up and accept things without ever making an effort to change them, and if a bigger player comes along you bow down to them and let them do whatever they want -_-

4. Slammer

Posts: 1515; Member since: Jun 03, 2010

It's a shame that the FCC isn't really serious of looking at curbing a duopoly. T-Mobile shouldn't have to be asking for fair bidding rights. Nor any smaller carrier. I would love to see the FCC give approval to AT&T and VZW the 600mhz licensing only if required to divest 700mhz currently held. It may not be as beachfront as 600 but, at least it would give the smaller carriers a chance at leveling the playing field for in building signals and distance. It would be unfair for the two largest to hold large swaths of both lower spectrum licenses. John B.

5. Gawain

Posts: 436; Member since: Apr 15, 2010

Oh please..."fair bidding rights?" Who are you kidding? T-Mobile is not some broke homeless child. This is where Legere and his big mouth can't deliver. With rare exception, none of the big markets in contention are even a consideration of the rural carriers.

7. ojdidit84

Posts: 462; Member since: Jul 16, 2011

So what you're saying is that you honestly believe that TMo has the clout to actually be able to out-bid ATT or VZW in all of these major markets where they need more spectrum to compete better... You're completely ok with the fact that two larger companies can completely shut out every single other carrier in the region with this bidding? But then you're the same type of person that complains that TMo doesn't have the coverage or building penetration that they can't bid on because they don't have the financial backing to compete on the level that the others are able to and fall further and further behind the others.

8. Gawain

Posts: 436; Member since: Apr 15, 2010

T-Mo is 75% owned by Deutsche Telekom, a company with over 100b euros in assets. SoftBank and Masayoshi Son are going to bring buckets of cash get Sprint back into the game. T-Mo and DT have the means to compete. Oh, and I don't complain about T-Mo's coverage because I am not their customer and do not need to suffer with GPRS when I get 15 mile outside a major city.

9. ojdidit84

Posts: 462; Member since: Jul 16, 2011

DT that refuses to invest any money into TMo. They're pretty much on their own over here. Even with them being 75% owned by DT, they're not going to get the support that they need. The day that DT offers up some cash to help TMo gain some spectrum or expand their network is the day that I'm running out to by some lotto tickets.

10. Slammer

Posts: 1515; Member since: Jun 03, 2010

If you follow my posts, you would have a better understanding where T-Mobile ranks with me. However, I won't let the negative opinion overtake my concern for consumer advocacy and choice. The two largest carriers have worked has a cartel for far too long and the FCC has practically supported these measures by neglecting safeguards to prevent a possible duopoly. Failing to understand the complexity of the upcoming 600Mhz auction has caused you to lash out at my post while dismissing your own reason why you don't use T-Mobile. The very same reason T-Mobile and any other small carrier would love to score very lucrative spectrum, is for enhancing its network to entice more interest in it by potential customers. You complain T-Mobile or Sprint don't have the service, yet when the carriers want the chance to capitalize on their respective networks within reasonable financial obtainability, you make claims that these smaller companies seem to have unlimited funding. This is very valuable spectrum. Verizon and AT&T will stop at nothing to outbid the rest. The above editorial clearly reveals the spending power that the two have over the others. Even with the parent companies at hand, they are no match. John B.

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