The financial analysts at Wells Fargo predicted that AT&T will outspend its rivals on licenses during the FCC's incentive auction next year of TV broadcasters' 600 MHz spectrum, dropping up to $10 billion on a 2x10 MHz block of spectrum with nationwide capability. The analysts predict T-Mobile will come in second with bids of up to $8 billion, while Verizon will clock in last among the nation's largest wireless carriers with a total of $5 billion in bids.
T-Mobile US is asking the FCC to prevent Verizon from bidding on reserved spectrum in a dozen markets across the United States. The action again underscores the behind-the-scenes clashes between the nation's biggest wireless carriers as they work to improve their position going into next year's 600 MHz incentive auction of TV broadcasters' unwanted spectrum.
What are the nation's TV broadcasters going to do after they give up some of their spectrum to wireless carriers in the FCC's upcoming incentive auction? Why, they might compete directly with those very same carriers, of course. At least, that's how the market may shake out if the nation's TV broadcasters adopt the new ATSC 3.0 transmission standard in the coming years.
Executives from major U.S. TV broadcasters like Sinclair Broadcast Group, CBS and Gray Television said their respective companies will likely participate in the FCC's upcoming incentive auction of TV broadcasters' 600 MHz spectrum-- to varying degrees. And executives from other publicly held TV broadcasting companies said they will take a wait-and-see approach to the event.
Comcast executives said the company's NBCUniversal unit will "likely" give up spectrum to the FCC as part of the agency's incentive auction of TV broadcasters' 600 MHz spectrum. However, Comcast Cable chief Neil Smit said the company hasn't yet decided whether it will participate as a bidder in the auction in order to purchase spectrum.
Despite Sprint's announcement that it will not participate in the FCC's planned incentive auction of TV broadcasters' 600 MHz spectrum next year, analysts still expect the event to generate as much as $60 billion in total bids. That amount would make the auction by far the government's most successful spectrum auction ever in terms of total money raised. However, some analysts are predicting that average spectrum license prices might be lower in next year's auction than this year's AWS-3 auction due to the FCC's tightened bidding rules, the 30 MHz spectrum reserve, and wireless carriers' tightening balance sheets.
T-Mobile CFO Braxton Carter said the carrier might have as much as $10 billion it could spend on spectrum during the FCC's incentive auction of 600 MHz spectrum next year. However, he said that he doesn't think T-Mobile will need to spend that much to obtain the spectrum it wants.
The nation's wireless carriers may well have more 600 MHz spectrum to acquire during the FCC's incentive auction next year than they had expected. "From our conversations it appears that absent any legitimate reason (like interference) the auction will begin on March 29th, with better than expected participation from broadcasters," said Jefferies analysts in a recent note to investors. "Officials made it clear that it is unlikely that broadcasters will be able to sell their spectrum directly to the carriers, that a new auction will take place near-term, and that future auctions will reimburse reallocation costs. The FCC is clearly hopeful for participation from both traditional and non-traditional players."
Analysts believe Sprint's decision not to participate in next year's 600 MHz incentive auction represents a major positive development for T-Mobile US, which now will face fewer competitors in bidding for the 30 MHz of spectrum in the auction that is being set aside by the FCC for smaller wireless operators.
Testing hardware and software in field trials has been routine for wireless operators, especially when new spectrum bands are introduced, but in the case of 600 MHz, which would involve both the introduction of a new spectrum band, and "perhaps new 5G technology," the need for thorough testing "would be even more critical," AT&T told the FCC in a filing earlier this week.