Verizon's Shammo: We don't have a 'great need' for 600 MHz airwaves, remain focused on small cells

Verizon Wireless (NYSE: VZ) is not desperate for low-band spectrum and does not necessarily need to secure a trove of airwaves in next year's incentive auction of 600 MHz broadcast TV spectrum, according to Verizon Communications CFO Fran Shammo. The company may participate in the auction, but in the meantime, it is focused on densifying its network through small cells and refarming some of its 1900 MHz PCS spectrum.  

"The need for low-band spectrum for us is not a great need," Shammo said on Verizon's second-quarter earnings conference call. He noted that Verizon rolled out its macro LTE network using its nationwide 700 MHz spectrum.

Shammo also noted that the FCC postponed its vote on the rules for the incentive auction from July 16 until Aug. 6, and that the company would evaluate the final rules before deciding whether to participate, leaving open the possibility that Verizon will be a bidder for airwaves broadcasters will sell. Yet his comments indicate that right now Verizon is not an enthusiastic potential bidder, unlike AT&T Mobility (NYSE: T) and T-Mobile US (NYSE:TMUS) and to a lesser extent Sprint (NYSE: S).

Verizon and AT&T have been pushing back against T-Mobile's efforts to get the FCC to increase the amount of spectrum set aside for smaller carriers to bid on in the incentive auction. T-Mobile wants the size of the reserve increased from 30 MHz to 40 MHz, but the FCC appears to be leaning against that position.

Verizon will be excluded from bidding on the reserve spectrum in many markets where it holds more than 45 MHz of low-band spectrum below 1 GHz. While Verizon faces many more restrictions than AT&T and will be barred from bidding on reserve spectrum in most of the country, it will be free to bid on the reserved spectrum in most of Florida, as well as parts of the Midwest, Maine, Texas and Wisconsin, and several other markets scattered throughout the country. Additionally, Verizon will be free to bid on unreserved spectrum throughout the country.

For now, Shammo said Verizon feels comfortable with its spectrum position and network planning. He said that only 40 percent of Verizon's licensed portfolio, mainly its 700 MHz and AWS-1 licenses, are being used for LTE, even though LTE data traffic now accounts for 87 percent of all of Verizon's mobile data traffic. "We have plenty of capacity" to deal with the ramping up of LTE data demands, he said. Verizon has started refarming some of its 1900 MHz spectrum from 3G to LTE service in some markets, he noted.

Shammo said Verizon's decision after the AWS-3 spectrum auction ended in January to densify its network is proceeding on schedule, with small cell and distributed antenna system (DAS) deployments. He said Verizon is "well into" a small cell deployment in New York City as well as in Chicago.  

In the second quarter Verizon spent a total of $3.1 billion on wireless capital expenditures (and $4.5 billion in total on capex), and $5.5 billion in the first half of the year on wireless capex (out of $8.15 billion in total). The company still expects to spend $17.5 billion to $18 billion in total for 2015.  

For more:
- see this Verizon site

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