MSS Spectrum Could Play Second Fiddle to AWS Auction, Speakers Say
L-band and S-band satellite spectrum could offer an alternate spectrum source for failed AWS auction bidders, or non-bidders for that matter, analysts and satellite executives said Thurs. in a Kagan Research wireless briefing. All eyes are on AWS, panelists agreed. But some said auction participants realize mobile satellite services (MSS) operators hoping to partner on terrestrial wireless ventures still will need partners when the AWS auction is over. Mobile Satellite Ventures and Inmarsat has spectrum holdings in the L-band. ICO and TerreStar have spectrum in the S- band. All have voiced interest in partnering with a non- satellite firm to develop next-generation terrestrial wireless networks using their satellite spectrum, but no deals have been announced.
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“For the moment, the spotlight is on AWS and the rest of us are folks that will be looked at post or during the AWS auction, but we're certainly not in the spotlight today,” said Mobile Satellite Ventures Exec. Vp-CFO Scott Macleod. “Players like Murdoch and cable may wait to see what happens at AWS and then return to the alternative,” Stifel Nicolaus analyst Rebecca Arbogast said of the MSS operators. L-band and S-band spectrum, at 1.6 GHz and 2.1 GHz, respectively, is comparable to AWS at 1.7-2.1, Arbogast said. Roughly the same kinds of 4G services could be developed in any of the bands, she said.
MSS firms’ big advantage is that they got their spectrum free -- and that their spectrum provides an immediate national footprint, Arbogast said. But the downside for wireless interests looking to use satellite spectrum terrestrially “is that they need to have a business plan where keeping a satellite is an asset rather than a burden,” Arbogast said: “There has been some discussion that if the Commission were asked nicely, it might abandon the satellite requirement for L-band and S-band MSS spectrum, but I disagree. I think the Commission will stay with that requirement.”
“The FCC wants to see a vibrant MSS satellite business because it’s very important to the federal government and at times of emergency,” said Macleod: “We're big believers in that business. We're going to spend $1.1 billion on our new satellites and we're proud to do it.” Some people see the satellite portion of MSV’s business as a “distraction,” he said: “But Nextel’s push-to-talk also looked like a distraction at first.”
Participants on the call generally agreed the AWS auction will be “disciplined” -- unless nontraditional entrants mix it up. Pre-auction activity in the financial markets, a general predictor, has been “very disciplined,” Bruce Falkenburg of Falkenburg Capital said: “Buyers are being very disciplined, and I would guess the auction is going to be very disciplined as well.” Carriers want to fill out footprints or add to holdings for future needs, but at reasonable prices, he said.
Rumored new entrants could cause the auction to “break out,” Falkenburg said: “If we see Internet companies, cable companies, or satellite companies aggressively enter this auction and try to tie up spectrum, I think that could cause things to get heated. But I think that’s highly unlikely.” Others think it’s very likely, he said: “There are differing opinions there.”