4G spectrum auction ends, raising a record $45B

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It took a grueling two and half months, but the Federal Communications Commission auction of new 4G airwaves is finally over. The provisional winning bids totaled $44.9 billion for 65 MHz of airwaves, the most the FCC has ever raised at an auction, but we won’t know that actual winners for a few days when the commission releases the official results.

The contest came to a close Thursday morning at the end of 341st round when no new bids were submitted. As you might expect the heftiest prices accrued to the big cities: A single 20 MHz license in New York City metro region went for $2.8 billion, while the same license in Los Angeles went for $2.1 billion. Once you got past the third largest metro area, Chicago, winning bids fell under $1 billion. The cheapest license? That would be a 5 MHz block in the territory of American Somoa, which cost just $2,800.

Unlike previous auctions, which opened up new spectrum bands for 3G and 4G services, Auction 97 centered on a band already widely used for LTE: the Advanced Wireless Service (AWS) band. It’s where [company]T-Mobile[/company]’s main LTE network lies as well as the new LTE overlays built by [company]Verizon[/company] and [company]AT&T[/company]. All three of those carriers participated in the auction, as they can easily add capacity to their networks with these new licenses.

The big question mobile industry wonks are debating, though, is just how heavily [company]Dish Network[/company] bid in the auction. These AWS airwaves complement the satellite spectrum it recently repurposed for 4G use, but the wily satellite TV operator may have had other goals in the auction. Analysts have suggested that Dish might be driving up bid prices for its competitors or gathering a stockpile of spectrum it can use for future leverage over the carriers.

The auction more than quadupled the $10 billion reserve price the FCC set, producing far more interest than anyone in the industry predicted. There are a lot of different opinions on what the record-busting conclusion of the auction means, though. My colleague Jeff John Roberts recently pointed out it’s a victory for net neutrality, as the high prices paid show that the carriers were bluffing when they claimed that Obama’s net neutrality plan would stifle investment.

Gigaom contributor Peter Rysavy said that the participation in the auction shows that the “spectrum crisis” is very real. If carriers could add more capacity and speed to their networks through technology upgrades and more cell towers, then they wouldn’t be paying such ridiculous prices for new airwaves, he wrote in a recent Gigaom post.

The mobile industry’s lobbying group CTIA tends to agree with Rysavy’s conclusion. CTIA’s new President Meredith Atwell Baker issued this statement:

The AWS-3 auction is the highest-revenue generating auction in the 20 year history of FCC spectrum auctions, and with the last major auction six years ago, this reflects wireless companies’ demand for this finite resource to meet Americans’ growing mobile broadband usage. With nearly $45 billion in bids – and billions more in capex – this auction is yet another illustration of the significant economic impact that exclusive, licensed use spectrum provides taxpayers and the U.S. economy. ?

3 Comments

Electron Dynamics

I am a bit skeptical especially with the almost imminent roll-out of 5G network in about 3 years time.

Aquarius Blend

Actually carrier WOULD “add more capacity and speed to their networks through technology upgrades and more cell towers” instead of paying such high prices for new spectrum if it wouldn’t take so much time. Time to deploy a new cell tower ranges from at least 4 months till 2-3 years* starting from design, city hall approvals, roll-out, optimization etc). Let alone the costs that is anyway over 50k USD per site. When someone does the math, nationwide or city wide, it is much faster with a new spectrum. And in time it becomes cheaper since ROI (return of investment) is much faster. Just my 2 cents opinion .

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