It has been almost four years, but we are finally seeing the Federal Communications Commission host another auction of wireless airwaves, which will result in billions of dollars in spending by competing US carriers. Estimates tell us that all four major carriers along with Dish Network will be spending somewhere around $46 billion dollars on spectrum in both the auction proper and in a series of smaller transactions over the next two years. Since the last auction in 2008, we have seen the smartphone market explode. Appropriately, this means that mobile data usage is at an all time high as well. What the FCC intends to do is to open up more airwaves to carriers, which could mean improved service for whichever carrier wins the bids.
Recently, with all the chatter about the potential T-Mobile and Sprint merger, we have been talking a lot about mobile bands and spectrum. But what exactly does that mean? Well, a spectrum is how carriers transmit us data, voice, and texts. Companies pay for certain rights to use specific slices of the spectrum. Lower bandwidth spectrum is ideal for over wide, open spaces, and can penetrate walls and obstructions better, making it ideal for suburban and rural towns. In the auction, the FCC is going to be auctioning off the 600MHz band next year, and it is expected to be the most competitive of them all. While currently being used by television stations, it is going to be resold to wireless providers. Every service provider wants this band. It is expected that it will have the most competitive pricing. Later this week, the FCC will be selling off the ‘H Block’ spectrum, which is expected to be sold to Dish. The H Block includes two higher frequency bands, which are ideal for handling a high volume of traffic, especially in mobile areas. Sometime later this year, the FCC is expected to auction off the AWS-3 band, which is a high frequency band suited particularly well for wireless.
All mobile carriers have been feeling the strain of the increased mobile demand. Even T-Mobile and Verizon have recently presented a deal between them to the FCC for approval, asking for permission to swap bands. This auction provides the opportunity for some slight relief, allowing them to expand their services, but at a major financial cost. Even AT&T’s Chief Strategic Officer, John Stankey, stated “Our need for spectrum is no less but our economic willingness to pay has limits.” Sprint wants to focus on the lower-band spectrum, but as this auction comes when Sprint is considering a takeover of T-Mobile, they need to consider where they want their money to go. T-Mobile has stated that they as well want to acquire more low band spectrum, and they will make every opportunity to do so.
To throw some more into this mix, the FCC is also looking into exactly how much spectrum they will allow each carrier to hold in a given market, and what each band is worth. Certain members of Congress, especially Republicans and Senate Commerce Chairman Jay Rockefeller (D., W.Va), have advised the FCC not to be very stringent about things, emphasizing the need of the auction to bring in revenue for the government. These statements come after a movement by the Justice Department, alongside public interest groups, calling for a way for Sprint and T-Mobile are promised at least some access to the 600MHz spectrum, in order to ensure that AT&T and Verizon do not create more of a duopoly after the auction is completed. Regardless, the FCC Chairman has yet to release any plans on the rules of the auction. So what do you think about this? Is this auction a good thing, or a bad thing, considering how it is entirely possible for AT&T and Verizon to sweep up everything, leaving Sprint and T-Mobile in the dust? Let us know that and any other thoughts in the comments!
Source: WSJ