H Block auction ends at $1.564B, with Dish Network as likely winner

The auction of the 1900 MHz PCS H Block officially ended Thursday afternoon, with total bids of $1.564 billion, exactly the reserve price. Although it is not yet official, Dish Network (NASDAQ: DISH) is likely going to be the winner of the airwaves.

The auction started more than a month ago, on Jan. 22, and many financial and industry analysts expected it to be over earlier this month. The FCC is expected to officially announce the results and the winners in the next few days (the agency conducted a blind bidding process for the H Block, where it disclosed the number and amount of bids each round but not the identities of the bidders).

Licenses for areas in New York City, Los Angeles and Chicago generated the largest bids, Reuters noted. Tampa, Fla., was the highest priced market at $1.07/MHz/POP, said BTIG analyst Walter Piecyk. However, the top 20 markets sold for only $0.61/MHz/POP, the analyst said.

H Block per MHz/POP prices are relatively in line with recent values assigned to other bands, Piecyk pointed out. For example, Verizon Wireless' purchase of a massive block of AWS spectrum from a handful of cable companies, approved in 2012, was priced at $0.69/MHz/POP. Meantime, lower-band spectrum continues to generate higher prices--for example, T-Mobile US' purchase of Verizon's 700 MHz A Block spectrum, announced earlier this year, is valued at $2.03//MHz/POP.

The H Block is a 10 MHz block of paired airwaves that runs from 1915-1920 MHz (for the uplink) and from 1995-2000 MHz (for the downlink). Dish controls spectrum adjacent to a portion of the H Block, called AWS-4; Dish's 40 MHz of AWS-4 spectrum specifically runs from 2000-2020 MHz (for the uplink) and 2180-2200 MHz (for the downlink). Dish asked the FCC to let it use the 2000-2020 MHz band for downlink operations instead of uplink as a condition for agreeing to bid the reserve price.

"With this successful auction, the commission makes good on its commitment to unleash more spectrum for consumers and businesses, delivering a significant down payment towards funding the nationwide interoperable public safety network," FCC Chairman Tom Wheeler said in a statement. "The H Block auction is a win for the American people, and we thank Chairwoman Clyburn for her leadership scheduling it. We also commend everyone who worked so hard to resolve technical issues that made this previously unusable spectrum valuable."

"The FCC's H-Block auction ended at $1.564 billion, not a dollar over the reserve price established by Dish of $0.50/MHz/POP," wrote BTIG's Piecyk in a blog post. "The closing price is pretty strong evidence that this was more of a negotiated deal with the FCC, rather than an auction."

Piecyk said that this negotiated auction purchase likely stemmed from Dish's work to form an agreement on 700 MHz interoperability. That 700 MHz interoperability announcement, which occurred late last year, primarily involved AT&T Mobility agreeing to add 700 MHz Band Class 12 support to its LTE devices, thus allowing smaller wireless carriers with 700 MHz A Block licenses to also sell the gadgets. But as part of that interoperability agreement, Dish agreed to reduce the power levels of transmissions on its E Block spectrum, and in return got an extension on its buildout requirements. 

"While I might not have agreed with every single decision that was made in connection with this auction, I believe that commencing this auction in January was the right call and applaud then-Chairwoman Clyburn for her decision to do so," said FCC Commissioner Ajit Pai in response to the H Block auction results, according to Broadcasting & Cable.

For more:
- see this FCC site
- see this Reuters article
- see this Broadcasting & Cable article
- see this BTIG post

Related Articles:
H Block auction likely to end within days, with Dish in the lead
H Block auction appears to be winding down, with Dish still seen in the lead
Analysts: Dish likely to waltz away with H Block soon, with bids only topping $698M so far
FCC kicks off H Block auction, with Dish as lead bidder
Dish Network appears set to secure H Block spectrum at FCC auction next year
Analyst: Dish could spend up to $10.7B on LightSquared, H Block, AWS-3 and 600 MHz spectrum

Article updated Feb. 28. Mike Dano contributed to this report.