The Federal Communications Commission (FCC) has just closed its auction of AWS-3 wireless spectrum licenses, raising a record $44.9 billion in the process. The Wall Street Journal reports (on line subscription required) that this is the largest amount of money the FCC has ever collected from a spectrum auction, and is more than double what was earned in 2008 during the much publicized 700MHz auction.
[Reference: Has the 700 MHz Auction Been a Failure?]
The auction was comprised of over 1,600 different licenses. The FCC said it will announce the auction results within the next few business days.
The AWS-3 spectrum cover frequencies in the 1700MHz and 2100MHz blocks, but they do not overlap with the AWS-1 spectrum that a number of carriers (most notably T-Mobile and Verizon) already use. AWS-3 spectrum is good at carrying large amounts of data and is well suited for cities, where wireless data use is soaring. Winners of the auction will likely use the new spectrum to bolster their existing wireless networks with greater capacity (except for Dish Networks which has been accumulating spectrum but hasn’t deployed a wireless network yet).
Seventy companies participated in this AWS auction, including Verizon, AT&T, T-Mobile, and Dish, but the FCC hasn’t yet released how much each company bid. The auction’s aggressive bidding surprised analysts who thought it would be a quiet affair dominated by AT&T and Verizon. Anonymous results show multiple bidders fought hard for coveted licenses in markets like New York and Los Angeles, which commanded the largest sums. As of the auction close, the four main licenses for the New York region alone totaled about $6.2 billion.
Analysts estimate the bulk of the auction proceeds came from AT&T and Verizon, each of which might have spent $15 billion to $20 billion on bids. It’s possible that both carriers bid around each other since the AWS-3 band plan made it possible for two carriers to land 20 MHz of spectrum. Other major bidders likely were T-Mobile and Dish Network.
The paired blocks have earned the largest bids in many markets. The J Block license for New York City alone has pulled in nearly $3 billion.
The aggressive bidding highlights the enormous scale needed to compete in the U.S. wireless market, a reality that makes it hard for rivals to challenge the market’s leaders. AT&T and Verizon control most of the industry’s most lucrative customers and the bulk of its revenue and profits, which gives them enormous financial firepower in such auctions.
While big markets like New York, Los Angeles and Chicago drew the highest bids, smaller markets including Portland, Maine, and Louisville, Ky., received bids over $20 million. One license in American Samoa commanded the lowest bid, at $2,800.
On Wednesday, January 28, 2015, the FCC said Blocks G, H, I and J garnered no bids or withdrawals during Round 337. Since no proactive activity waivers had been placed and the reserve price has already been met, the Commission closed bidding on those blocks: G Block (1755-1760/2155-2160 MHz), H Block (1760-1765/2160-2165 MHz), I Block (1765-1770/2165-2170 MHz), and J Block(1770-1780/2170-2180 MHz). H, I and J are broken up into 176 licenses each based on economic areas (EA) and G is broken up into 734 licenses based on cellular market areas (CMA).
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