The FCC's upcoming incentive auction for 600 MHz spectrum has gotten a bit less interesting in the past week.
Charter Communications is the latest cable company to take a lukewarm view of the auction, saying it's unlikely to participate. Like some other wireline service providers, Charter had been seen as a potential dark horse to leverage the spectrum sale to elbow its way into the mobile market.
In a Seeking Alpha transcript of the company's quarterly earnings call, Charter CEO Tom Rutledge cited the company's pending acquisition of Time Warner Cable and Bright House Networks, saying uncertainty about the eventual outcome of the deal would likely preclude its involvement in the auction. Those deals may not close until June, and regulators may demand concessions before granting approval.
"Well, with regard to the auction, we're not in exactly the same place as Comcast because we have this pending transaction," Rutledge said, pointing to Comcast's confirmation that it may bid during the auction. "And at this point, we can't be assured of what our footprint is. And so, it's difficult for us to participate in the auction without regulatory clarity."
Comcast said earlier this week that "is taking a paddle" in the auction but is only considering acquiring spectrum that can give it more "strategic flexibility" rather than aggressively pursuing a wireless service.
Like Comcast, Bright House and Time Warner have MVNO deals in place with Verizon, but none of the three has actually launched wireless services commercially. Some onlookers have speculated that Charter would participate in the auction as part of a long-term strategy to launch a mobile business leveraging the MVNO agreements and newly purchased spectrum, but Rutledge's statements all but doused those ideas.
"For instance, even in the Time Warner assets and Bright House assets, we know there's an MVNO, but we haven't actually seen it. And so, we have a lot of unknowns in terms of our ability to participate. We've considered participating by potentially filing the application. But if the timeline is as projected, we're not going to really be able to do it, given our regulatory status."
While FCC Chairman Tom Wheeler has said he expects the auction to be a "spectrum extravaganza," some are beginning to doubt the event will generate the $45 billion to $85 billion analysts had previously estimated. Tight carrier budgets are likely to constrain bidding from existing players in the space, as Bloomberg recently reported, and it's unclear how much attention the auction will draw from outsiders hoping to move into mobile. But recent comments from Charter and Comcast aren't good news for those hoping for bidding wars and sky-high revenues at auction.
- see this Seeking Alpha transcript
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