CBRS Auction Not Disappointing, May Net a Few Billion Dollars
Relatively low bidding so far in the citizens broadband radio service auction is in line with expectations and has no negative implications for the December C-band auction, observers told us. The auction hit $1.28 billion at the end of 19 rounds Monday, which translates to 6 cents per MHz/POP nationwide. FCC officials on Monday said bidding is about as expected at this stage.
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“Based on the reduction rate of excess demand, it looks very likely that Auction 105 proceeds will cross the $3 billion threshold,” Sasha Javid, chief operating officer at BitCurrent, told us. “The FCC must be thrilled so far,” he said: “Because of the novel nature of these licenses, it was always going to be difficult to forecast demand from auction bidders, but it is fair to say that proceeds are trending north of what I expected. This also bodes well for C-band auction in December. I suspect that the nationwide carriers would prefer to make the C-band the foundation of their mid-band spectrum holdings for 5G.” Prices vary widely, with the most expensive markets including Los Angeles, San Francisco, Houston, Las Vegas, Miami and Salt Lake City.
Bidding so far “is a good start and ahead of what I expected,” said Recon Analytics’ Roger Entner: “The projected $2 billion to $3 billion is low enough that any of the expected big spenders on C-band will not be significantly encumbered by it.”
Unusual terms of use for the priority access licenses and the adjacency of so much unlicensed general authorized access spectrum “could end up suppressing prices quite a bit,” emailed MoffettNathanson’s Craig Moffett. “Every serious bidder probably feels they MUST get at least one license (or perhaps two, if they plan to use one for downlink and another for uplink) before it is worthwhile for them to deploy radio equipment,” he said: “But once their equipment is deployed, they will then be able to tap into all of the GAA spectrum, and, in theory, all of the other licenses that everyone else bought as well. As a result, the incremental value of ‘winning’ additional PALs may be deemed to be relatively low, at least compared to the first. If that’s right, seven licenses per market may prove to be more than enough to satisfy demand without driving up prices in most counties.”
Executives at the companies helping manage sharing in the band were upbeat. An auction above $2 billion would be a “blockbuster,” said Key Bridge Wireless CEO Jesse Caulfield.
“We are extremely pleased by the broad industry participation by the largest number of applicants ever in a spectrum auction,” said Jennifer McCarthy, Federated Wireless vice president-legal advocacy. “The bidding activity and demand across both large and small markets clearly shows strong interest in the use of CBRS spectrum for a variety of use cases, including private networks.”
“We are pleased with the progress of the CBRS auction so far and it looks like it’s on track to come in at the initial expectations,” said Mark Gibson, director-business development at CommScope. “Some of the more active counties in terms of aggregate demand have populations in the thousands, which indicates there is a lot of interest from rural areas.”
New Street’s Jonathan Chaplin told investors last week the C-band auction is likely to hit $55 billion based on capacity needs. “Most of the major bidders want more spectrum than they are likely to get, which means the spectrum each participant wins will be driven by their balance sheet capacity relative to others,” the analyst said. C band is “critical spectrum at a critical time,” he said: “The intrinsic value of the spectrum is high because it is so well suited for 5G. There is also a greater supply of spectrum arriving at once than ever before, which means that bidders will run out of balance sheet capacity before intrinsic value is reached.”