Low Numbers So Far in 28 GHz Auction No Surprise, Analysts Say
The FCC’s first high-band spectrum auction, for the 28 GHz band, had $690 million in provisionally winning bids when it closed for the holidays. It was still unclear whether it will reopen Thursday, an issue expected to be addressed in the FCC’s Wednesday shutdown public notice. Industry analysts said the numbers so far, though far lower than some previous spectrum auctions, aren’t surprising. The AWS-3 auction ended in 2015 at a record $44.9 billion and the 600 MHz TV incentive auction two years later at $20 billion.
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There’s not a lot with which to compare the numbers, said a former FCC spectrum official. The only benchmarks are past deals, specifically Verizon’s $3.1 billion buy of Straight Path and its high-band licenses in 2017 (see 1705110052), the lawyer said.
Craig Moffett, analyst at MoffettNathanson, warned against drawing many conclusions. “What was up for auction in the 28 GHz band felt like leftovers after Verizon’s Straight Path acquisition,” Moffett said. “It could be that other more intact bands draw more interest. Still, as we’ve been warning our clients for the past couple of years, the narrative that there is more demand than supply is probably wrong. In fact, there is a ton of new spectrum coming to the market, and it’s not clear there is enough available capital to consume it all at attractive prices.”
“The 28 GHz auction is a poor benchmark as it covers only part of the U.S. and the already allocated frequencies are mostly owned by Verizon and T-Mobile,” said Roger Entner, analyst at Recon Analytics. “We should see higher prices for potentially nationwide licenses. At the same time, I think $40 billion levels are hard to beat.”
“The results are about what was expected” at just more than 1 cent per MHz/POP, only slightly below the prices in the AT&T-Verizon bidding war for Straight Path, said spectrum consultant Tim Farrar. “A benchmark of around 1 cent MHz/POP for future millimeter-wave auctions is likely to be in the right order of magnitude and the proceeds of future auctions will be hundreds of millions to a few billions of dollars, not tens of billions of dollars like the prior low-band spectrum auctions,” he said. Farrar predicted next year’s planned auction of the 37/39/47 GHz bands “could be in the high single digit billions of dollars” since 2,400 MHz will be for sale in the 37/39 GHz bands and 1,000 MHz in the 47 GHz band.
The 28 GHz auction “just didn’t have the same buildup as 600 MHz or AWS-3, so I don’t think there was any consensus out there that people can compare expected versus actual” prices, said Cowen’s Paul Gallant.