Interest High in 700 MHz Spectrum to be Sold by FCC
The 30 companies and associations that filed comments on FCC rules for the upcoming 700 MHz auction speak to the massive interest in the 60 MHz of spectrum to be auctioned before early 2008, sources said Tues. “From a business standpoint, if AWS is beachfront spectrum, this is the Riviera of beachfront,” said an industry official: “The fact that you did see all these commenters is indicative of how interested people are.”
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Meanwhile, carriers that bid in the AWS auction are starting to lay out their plans for that spectrum. Today (Wed.) is the end of a ban on discussing the auction under anticollusion rules. T-Mobile, the largest bidder in the AWS auction, plans a call with analysts Fri.
“It is absolutely indicative of the fact that everyone is focused on 700 MHz,” said a source who has been active in spectrum auctions: “It’s just much more valuable spectrum than even the AWS spectrum because of the propagation characteristics.” The source predicted that Verizon Wireless, T-Mobile and Cingular will be active in the 700 MHz auction, as will possible new market entrants. “There’s only 60 MHz,” the source said: “If you figure out what the incumbent players are going to suck up, it doesn’t leave much.”
“There’s no question that 700 MHz is prime real estate and that for the rural carriers the propagation characteristics are dramatically better than the last auction” of AWS spectrum, said a regulatory attorney with wireless clients.
Attorney Rudy Baca, a former 8th floor adviser, said the AWS auction demonstrated the industry’s “insatiable” need for spectrum. “This confirms what many of us have been saying,” he said of the 700 MHz filings: “700 MHz is going to be the big one because of the propagation and the penetration characteristics.”
“It’s obviously indicative of the fact that 700 MHz is so critical to the entire industry,"said Jessica Zufolo, analyst with Medley Global Advisors. “There are still so many questions as to how 700 MHz will play out in the market.”
DirecTV and EchoStar, meanwhile, in their first formal comments since dropping out of the AWS auction in its early days, said their experience in it suggests that FCC auction rules favor local or regional competitors and discourage nationwide entrants. The Commission sought comments on whether relatively small license areas should be auctioned to improve rollout in rural areas. Most commenters asked for smaller license areas. DirecTV and EchoStar were unique in asking for at least “one nationwide 700 MHz license.”
EchoStar and DirecTV joint venture Wireless DBS faced a “classic case” of what the Commission terms an “exposure problem” in the AWS auction, the DBS operators said. An FCC decision to assign over 1/2 the AWS spectrum in small CMAs and regional economic areas (EAG) made it impossible for Wireless DBS to run nationwide service, they said. Wireless DBS would have had to win hundreds of contests for CMA licenses against entities with specific geographic interests, or it would have had to win multiple regional EAG licenses against incumbents intent on blocking new entrants, they said.
“There’s lots of positioning going on here,” Stifel Nicolaus’s Rebecca Arbogast said of DirecTV’s and EchoStar’s joint filing. The companies set themselves up to go after AWS strongly, then bowed out, she said: “With this filing coming on the heels of [Wireless DBS’s AWS withdrawal], it makes you wonder what is it that they want to do, what is it that they are going to do, and what is it that they want to make others think they want to do… One wonders whether we're supposed to take it at face value.”