3.45 GHz Auction Total Unlikely to Near C-Band's
With FCC commissioners set to vote Wednesday on a proposing rules for the 3.45 GHz auction, analysts said the spectrum sale won't likely drive numbers anywhere near the $81.2 billion, plus roughly $13 billion in accelerated clearing payments, seen in the C-band auction. Verizon and AT&T are stretched thin after that auction. And 3.45 GHz is expected to offer carriers at most 40 MHz each, based on aggregation rules limiting bidding. The auction must raise at least $14.8 billion to pay for clearance of the band, which isn't expected to be a problem.
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Verizon executives just laid out their plans to pay for their C-band buys and hinted that they remain in the market for spectrum (see 2103110034). AT&T executives said Friday they have the financial strength to pay for their C-band commitments and remain focused on adding spectrum (see 2103120063).
Verizon “tried desperately” to get out of buying roughly $3.5 billion it didn’t really want near the end of the C-band auction and is unlikely to participate “in any meaningful way in the 3.45 GHz auction,” said Sasha Javid, BitPath chief operating officer. AT&T, which got 80 MHz of C-band spectrum, “could benefit from acquiring another 40 MHz in this auction, especially if the prices are down dramatically from C-band prices,” he said. T-Mobile is likely to bid to add to its 2 GHz holdings, he said. “Only if Dish and the cable companies decide to bid aggressively in the 3.45 GHz auction will we see enough competition in this auction to drive prices up significantly above the mandatory relocation cost requirement.”
“The obvious problem is balance sheets,” MoffettNathanson’s Craig Moffett told us: “Verizon and AT&T are stretched to the limit.” Projected sizes of spectrum blocks being offered could also limit appeal, he said: “The C-band auction did what it did largely because it was possible for Verizon and AT&T to assemble very large contiguous blocks. The 3.45 GHz auction is likely to have a 40 MHz-per-bidder limit. If so, it won’t command the same prices.”
The C-band auction made clear the level of focus on midband for 5G, said Summit Ridge Group President Armand Musey. T-Mobile has lots of midband at 2.5 GHz, and “maybe AT&T spends a little bit,” he said. “Any new entrants are going to have to be aggressive in midband if they want to have a competitive portfolio.” It’s time for cable operators to show their hand, and Dish Network has lots of spectrum, he said: “Some people say that them getting more spectrum is like giving a drowning man more water, but they don’t have a lot of midband.” The prices won’t be comparable to C band, “but a lot of people on the outside have got to make a big decision,” he said.
New Street’s Philip Burnett said if the FCC uses citizens broadband radio service-style rules for the auction, it’s likely to bring in less than $7 billion. If rules are similar to the C-band auction, it could fetch $30 billion or more, comparable to the per MHz/POP price in that auction, he said. “Given the financial constraints of the incumbents, and the fact that Verizon just won 161 MHz in the C-band auction," he said, "it’s unlikely there will be the same amount of competition.”
Proposals to use CBRS-style rules may make the most sense for the auction, said LightShed’s Walter Piecyk. “Verizon changed its tune on its usability of CBRS on towers after the auction ended, so the sharing properties of a CBRS licensing scheme appears to be quite usable for operators and also enabled many private and utility applications.”
The three nationwide providers "should still be interested in the 3.45 GHz band, but values should be much lower, as winners have to accommodate the DOD as the priority user,” said Recon Analytics' Roger Entner. Dish and cablers are likely to be "opportunistic" in what they buy, he said: The band is a "nice to have," not a "must have," for them.