Sprint won't participate in AWS-3 spectrum auction, ceding opportunity to competitors

Sprint (NYSE: S) will not participate in the FCC's upcoming auction of AWS-3 spectrum, the carrier confirmed, giving the company's competitors one less player to worry about as they formulate their bidding strategies.

Applications for the auction, also known as Auction 97, are due today, upfront payments will be due Oct. 15 and the auction is scheduled to start Nov. 13. T-Mobile US (NYSE:TMUS) is expected to participate in the auction, along with Verizon Wireless (NYSE: VZ), AT&T (NYSE: T), Dish Network (NASDAQ: DISH) and many other smaller carriers.

"Sprint has decided not to participate in the FCC's AWS-3 auction but will continue to evaluate the opportunities presented by the upcoming 600 MHz incentive auction," Sprint spokesman Jeffrey Silva told Bloomberg.

Sprint's decision to forego participating in the AWS-3 auction is not surprising. The carrier has certainly not been as vocal about its enthusiasm for the auction as it has been for next year's incentive auction of 600 MHz broadcast TV spectrum. Sprint has argued for the importance of low-band spectrum. Also, unlike Verizon, AT&T, T-Mobile and Dish, Sprint does not currently control any AWS spectrum or spectrum that is adjacent to the airwaves that will be auctioned in the AWS-3 proceedings.

For the time being, Sprint will be relying on its 800 MHz, 1900 MHz and vast roves of 2.5 GHz spectrum to expand and improve its LTE network. Sprint has 120 to 150 MHz of 2.5 GHz spectrum in the top 100 markets. Moreover, the FCC recently ruled that Sprint's 2.5 GHz spectrum should fall under the agency's "spectrum screen," which is designed to cap the amount of spectrum any one carrier can own. Sprint had argued that its higher-band 2.5 GHz spectrum shouldn't be counted by the screen. The result is that Sprint might exceed the screen if it participates in the AWS-3 auction.

The FCC has set a total reserve price of $10.587 billion for the AWS-3 auction. The 1695-1710 MHz band will be unpaired spectrum used for low-power uplink operations. The 1755-1780 MHz band will be licensed for low-power uplink operations and will be paired with the 2155-2180 MHz band, which is unencumbered by federal users, for downlink operations.

What complicates the AWS-3 auction is that two chunks of spectrum that will be auctioned are currently used by federal agencies, including the Department of Defense. In most cases, federal spectrum users will have to exit the 1695-1710 MHz and 1755-1780 MHz bands or geographically share them with commercial users. In July, the FCC and National Telecommunications and Information Administration (NTIA) issued a 43-page public notice outlining coordination procedures for the AWS-3 bands.

In an FCC blog post, John Leibovitz, deputy chief of the FCC's Wireless Telecommunications Bureau, noted that the commission announced the release by NTIA of a new Workbook and Workbook Information File, prepared by the DoD on coordination procedures.

"DoD developed the Workbook to provide guidance to potential bidders about their obligation to coordinate with DoD systems in 1755-1780 MHz," he noted. "This release is unprecedented in terms of the scope and granularity of government data provided to help applicants prepare for an auction. The Wireless Bureau strongly encourages all applicants to delve into this important resource."

Leibovitz noted that the spectrum designated for downlink operations at 2155-2180 MHz is free of government users and is available for use after licenses are granted, although there are some coordination requirements with incumbent non-Federal users, as there were in the PCS and AWS-1 bands. "This is 25 MHz of valuable downlink spectrum, generally available from day one," he noted.

He also wrote that the requirement "to coordinate with Federal incumbents prior to deployment in the uplink at 1755-1780 MHz largely goes away five and a half years after the auction. At that point, incumbent coordination zones contain only about 8% of the MHz-Pops in the uplink; 92% of the uplink is free and clear."

Meanwhile, in other spectrum news related to the 600 MHz auction, two TV stations in Los Angeles, KLCS and KCET, agreed to share a single frequency to deliver their programming. The result is that there will be a channel of spectrum that can be auctioned off in next year's 600 MHz auction since the two stations are sharing the remaining spectrum.

"It's a compelling opportunity for broadcasters to continue their existing business on a shared channel, and take home a check for the spectrum they relinquish in the incentive auction," FCC Chairman Tom Wheeler said in a statement. "It is my hope that other broadcasters give it careful consideration as well."

Earlier this year KLCS and a separate nearby station, KJLA, conducted a pilot project to show that the stations can share the same broadcast spectrum. The project was meant to demonstrate to broadcasters that they can share spectrum with other broadcasters and not have their operations hurt as a result. Getting broadcasters to buy into that premise is key to getting them to relinquish their spectrum as part of the 2015 incentive auctions of 600 MHz broadcast TV airwaves. Without widespread broadcaster participation, the auctions will fail.

For more:
- see this Bloomberg article
- see this IDG News Service article 
- see this FCC blog post

Related Articles:
Expectations high for upcoming AWS-3 spectrum auction
T-Mobile to raise new debt, likely for AWS-3 spectrum auction
AWS-3 auction winners could face lots of spectrum-coordination hitches
FCC sets rules for $10.5B AWS-3 auction; T-Mobile, Dish denied request to split spectrum
T-Mobile, U.S. Cellular and C Spire cheer FCC's AWS-3 band plan