Report: AWS-3 license would fetch $2.8B without FCC's conditions

Analysis from the Phoenix Center says that the FCC's proposed auction of a nationwide 25-megahertz license in the Advanced Wireless Services (AWS) band would garner about $2.8 billion at auction if the license didn't come attached with substantial conditions--which includes offering free broadband wireless service and strict buildout requirements. Phoenix Center Chief Economist George S. Ford came to that number after analyzing the results of prior auctions in the AWS band and the recent 700 MHz auction, which resulted in an auction value of approximately $0.40 per MHz-pop.

The commission is proposing to combine the 2155 to 2175 MHz band with the 2175 MHz to 2180 MHz band to create a 25-megahertz swathe of spectrum that would support a nationwide license. The spectrum is referred to as AWS-3. Under FCC proposals, the licensee of this band would be required to use up to 25 percent of its network capacity for free, two-way broadband service at data rates of at least 768 kbps downstream. A network-based filtering mechanism would also be required for the free Internet service to protect children and families from obscene content. The winning bidder of the AWS-3 band would also have to offer coverage and service to at least 50 percent of the U.S. population within four years and at least 95 percent of the population by the end of 10 years.

These type of stipulations can substantially impact the value of spectrum, said the Phoenix Center. "There may be significant social or consumer value to many of the conditions proposed by the FCC for the AWS-3 license," said Ford. "But policymakers should be aware of the impact that their decisions have upon the value of spectrum and the business case for offering wireless services over encumbered licenses."

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