T-Mobile predicts auctions before 600 MHz auction to raise up to $16.4B, funding FirstNet

T-Mobile US (NYSE:TMUS) is arguing that it believes the nationwide public safety broadband network known as FirstNet will have all of the funding it needs before the incentive auctions of 600 MHz broadcast TV spectrum take place in mid-2015. AT&T Mobility (NYSE:T) and Verizon Wireless (NYSE:VZ) have argued against T-Mobile's positions for the incentive auctions, especially for limits on how much spectrum they can acquire, saying that doing so will deprive FirstNet of funding via lower auction revenues.

In a presentation T-Mobile executives made on Monday at the FCC to staff members of FCC Commissioner Ajit Pai, T-Mobile argued for several of its positions related to the incentive auctions, including the band plan it favors and spectrum aggregation limits. However, T-Mobile specifically had a slide titled "Anticipated Funding for FirstNet Will Be Met Before the Incentive Auction."

That slide said that the carrier expects the auction of the 1900 MHz PCS H Block to bring in $1.6 billion to $2.3 billion. Dish Network (NASDAQ: DISH) has agreed to bid the reserve price of $1.56 billion, but there are few other serious bidders. That auction starts Jan. 22.

T-Mobile also said it believes that it believes the AWS-3 auction of the 1755-1780 and 2155-2180 MHz bands and will produce anywhere from $6.3 billion to $9.4 billion. More carriers, including T-Mobile, are expected to bid on those airwaves, which the FC must auction before February 2015. T-Mobile also thinks that the 1695-1710 MHz band, which is to be paired with 15 MHz of spectrum, could fetch less than $1 billion if it is unpaired but $2.3 billion to $4.7 billion if it is paired.

That would bring the grand total of those auctions to $8.9 billion to $16.4 billion. T-Mobile noted that proceeds from the auction of the 1755-1780 MHz band do not go to the Public Safety Trust Fund and count toward FirstNet funding, and so are excluded from the calculations.

Source: T-Mobile

It's not entirely surprising T-Mobile would paint such a rosy portrait of how other spectrum auctions will proceed. If those earlier auctions bring in more revenue, it will put less pressure on the incentive auctions to be a massive financial success for the U.S. Treasury and FirstNet. That, in turn, could lead the FCC to adopt final rules for the incentive auctions that might limit how much revenue the incentive auctions take in. 

AT&T, Verizon and allied economists have been arguing for much of the past year that limiting how much spectrum the larger carriers can purchase will lead to lower auction revenue. T-Mobile, Sprint (NYSE:S) and smaller carriers have pushed back against that position, arguing smaller carriers need access to low-band spectrum to be more competitive because of the spectrum's better prorogation characteristics. 

Indeed, spectrum remains key: T-Mobile recently announced a deal with Verizon to acquire Verizon's 700 MHz A Block spectrum for $2.365 billion in cash, but T-Mobile will still have much less low-band spectrum than its competitors.

For more:
- see this T-Mobile filing
- see this T-Mobile presentation

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