According to new maps from Mosaik Solutions, Verizon Wireless (NYSE: VZ) could be subject to bidding restrictions across virtually the entire country in the FCC's 600 MHz auction next year. Meanwhile, AT&T Mobility (NYSE: T) could face restrictions in locations across wide portions of the West and East Coasts, but not in the central part of the country.
The maps from Mosaik, provided exclusively to FierceWireless, provide the clearest view yet as to exactly how the FCC's 600 MHz auction rules will affect the nation's two largest wireless carriers.
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According to the maps, Verizon could face restrictions in virtually every state in the country. The only major places where Verizon won't face restrictions are in Southern Texas, parts of the Great Lakes and in parts of the Northwest. AT&T, meanwhile, could be restricted from bidding in parts of California, southern Texas and large sections of the Northeast. AT&T will be free to bid on 600 MHz without restrictions across wide swaths of the Western United States.
Perhaps not surprisingly, AT&T praised the FCC's 600 MHz auction rules. "AT&T believes that the framework adopted today will give AT&T a fair opportunity to expand its LTE footprint to benefit consumers in all markets, and AT&T remains committed to auction success and anticipates that it will participate broadly," Jim Cicconi, AT&T's senior executive vice president of external and legislative affairs, said last week. "Although we expect bidding at auction to be competitive, we anticipate that, depending on auction dynamics and pricing, AT&T will bid to obtain between 20 and 40 MHz of spectrum nationwide."
Verizon, meantime, was far more impassive in its comments, acknowledging only the FCC's "progress on the incentive auction."
The FCC last week voted 3-2 along party lines for rules in the 600 MHz incentive auction of broadcast TV spectrum designed to prevent AT&T and Verizon from acquiring all the available spectrum up for grabs, thereby saving that spectrum for smaller carriers like Sprint (NYSE: S), T-Mobile US (NYSE:TMUS) and others. According to the rules, the FCC will withhold, or reserve, up to 30 MHz of spectrum for carriers that currently hold less than one-third of the available spectrum below 1 GHz in a market. Thus, any nationwide carrier with 45 MHz or more of low-band spectrum wouldn't be able to bid on the reserved spectrum--Verizon and AT&T are the only carriers that own more than 45 MHz of low-band spectrum. The goal is to ensure that smaller carriers without relatively low amounts of low-band spectrum are able to acquire 600 MHz spectrum in the auction.
Neither Sprint nor T-Mobile owns more than around 20 MHz of low-band spectrum in any market in the country, and therefore will be able to bid on reserved spectrum. AT&T and Verizon, too, will be able to bid on reserved 600 MHz spectrum in markets where they do not own more than 45 MHz of spectrum below 1 GHz.
The FCC said AT&T and Verizon command around 70 percent of all low-band spectrum licenses and Sprint and T-Mobile hold around 15 percent of all low-band spectrum licenses. According to the analysts at New Street Research, AT&T owns an average of around 57 MHz of low-band spectrum in the nation's top 100 markets while Verizon owns an average of around 47 MHz of low-band spectrum in the nation's top 100 markets.
The FCC will split the 600 MHz spectrum in a market into "reserved" and "unreserved" blocks only after the auction raises a specific, yet-to-be-determined amount of money. The FCC needs to raise enough revenue from the spectrum auction to pay and clear broadcasters that are giving up their spectrum and to fund the FirstNet public safety broadband network. Importantly, bidding can continue after the spectrum is split into "reserved" and "unreserved" spectrum. The amount of reserved spectrum in a market will be based on the demand from bidders. If the demand for reserved spectrum is less than what has been set aside, a portion of the reserved spectrum that is not in demand would revert to being unreserved.
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