T-Mobile Clearest Potential Loser in AWS Auction Delay
The FCC’s decision to delay the start of the advanced wireless services (AWS) auction from June 29 until Aug. 9 (CD May 22 p1) is considered bad news for T-Mobile - the national carrier with the most at stake in the auction. The net effect for other potential bidders of the action late Fri. is less clear. The FCC still must address a petition for reconsideration on designated entity rules for the auction, but is generally expected not to make substantial changes to the revised rules approved in April, officials said.
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“The bigger national providers basically were going to sit this out anyway,” said attorney Rudy Baca, a former FCC adviser: “The entity that is most hurt is T-Mobile because they have the greatest need. They need more spectrum to even start to look at offering 3G… The delay is bad for T- Mobile, and the increased risks are bad. This is sort of a loss all around for T-Mobile.”
A regulatory attorney who follows wireless issues said extending the start of the auction could mean a more competitive auction. “It could provide the opportunity for more companies to participate in the auction - parties that didn’t necessarily decide to participate the first time because they thought the pricing might be too high,” the source said: “Some of the big groups like Google or Yahoo or Microsoft might have another chance to think about coming in. It could increase the number of applicants.”
But Jane Zweig, CEO of the Shosteck Group, said for T- Mobile the delay shouldn’t prove critical. Zweig expects the auction to bring in significantly less than the $8-15 billion the govt. has predicted. She expects most major carriers, the ISPs and the cable operators to sit out the auction.
“The bigger issue is the spectrum itself and relocating the people that are on it,” Zweig said: “It provides some uncertainty for T-Mobile, but I don’t believe there will be delays beyond Aug… For T-Mobile, if you're looking at advanced networks, they're already behind. Two months isn’t going to make much difference.” For other players -- the DEs that are examining participating, cable companies and rural carriers, as well as nontraditional players like Google -- the delay’s effect less certain.
Jessica Zufolo, analyst with Medley Global Advisors, said it’s hard to predict whether the delay will mean more or less participation in the auction. “It could cut either way,” Zufolo said. “The fact that the FCC is delaying this auction is not earth-shattering, but by the same token it throws everybody’s financing plans out of balance. Up to now they've been lining up their financing to participate by a certain date, but now that date has changed… It’s really hard to line up financing as a DE or even as potential new entrant… Potentially it could provide a chilling effect.”
Ken Johnson, a lawyer with the Rural Telecom Group, said rural carrier interest in the auction is exceeding expectations. “All the rural guys were pretty much ready,” Johnson said. “If anything, this gives some guys who were thinking about it more time to get into the auction, which is good… There might be some fence sitters, we might pick up a few more clients [bidding in the auction], but only a few more.”
Chmn. Martin has yet to circulate an order answering the petition for reconsideration filed by Council Tree, Bethel Native Corp. and the Minority Media & Telecom Council asking for expedited review of a request that the FCC drop changes made to the DE program in an April 22 order (CD May 8 p2). The conventional wisdom at the FCC is the agency will make only minor changes to the order. But a source cautioned against jumping to conclusions before Martin starts circulating an order.