Expect Familiar Faces, Purses in 700 MHz, Analysts Say
AWS spectrum auction results were predictable and those for the 700 MHz auction could be, too, panelists said Thurs. at an FCBA Wireless Telecommunications Practice Committee lunch. The event came a day after the FCC awarded numerous licenses bought in the AWS auction. Panelists and onlookers downplayed chances of the 700 MHz transition hard date being imperiled in the new Congress but acknowledged some parties might try to change the terms.
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Despite rumors about new players in the auctions, most licenses ended up with existing carriers, in wireless or on the cable side, said Anna Maria Kovacs, founder of Regulatory Source Assoc. Widespread buildout is unlikely, but at least one set of potential new entrants -- the SpectrumCo coalition of cable companies -- probably will use their spectrum to enlarge their footprint in a joint project with Sprint Nextel, she said. Companies that “might have been more marginal players” didn’t jump in, but “one major player did,” Kovacs added.
Incumbents and satellite companies will want 700 MHz spectrum, said Rebecca Arbogast, Stifel Nicholas analyst and former chief of the FCC International Bureau Telecom Division. This would suggest results similar to the AWS auction, she said. The other “elephant off to the side” in the coming auctions is potential entry by Google, Microsoft, Intel and other high-tech companies, she said, but “I don’t think these companies want their own [networks], unless things go really askew” with net neutrality in the next year or 2, “which I don’t think they will.” If the auction is in 2007 and public safety gets a lot of spectrum by purchase or allocation, “you could see a repeat” of the predictability in the AWS auctions, Arbogast said.
The 700 MHz band is “very attractive to big players who can monetize voice,” new players looking to build networks would don’t want to pay what that spectrum is going to go for, said Yankee Group analyst Keith Mallinson, citing the “dollars per MHz/point of presence” metric, the commonest measure of spectrum value. Mallinson said any new spectrum band means “yet another radio you've got to put in your phone,” a deterrent even to major players.
The Wireless Bureau Wed. granted 550 of 1,087 licenses sold in Sept.’s auction. Though only half the numerical count, those licenses comprise 89% -- $12.2 billion of $13.7 billion bid -- of the AWS spectrum’s net market worth. The $12.2 billion nearly matches total revenue from all previous FCC auctions combined, the Commission said in a release. The Wireless Bureau “continues to review the remaining AWS license applications” and gave no indication of a timeline for granting those, it said.
Attendees questioned the panel about whether the 700 MHz transition “hard date” is at risk in the new Congress or in light of APCO’s “strong support of a Cyren Call-like public safety spectrum trust (CD Nov 30 p7). “You never want to underestimate the ability of the broadcasters,” but the mix of entrenched commercial interests and public safety enveloping a hard date means any attempt to move that date likely will fail, Arbogast said. Several pro-hard date industry sources who spoke with Communications Daily cited the need for vigilance and “working with” Congress, but most agreed with Arbogast. One source close to the DTV transition process said “it’s in the budget. Big companies have a lot vested in it… there’s very little chance this is going to slide materially.”