The FCC chairman has called the incentive auction, which got underway this week, “unprecedented.” One analyst adds this will be one of the last chances for wireless companies to secure high-quality spectrum in substantial amounts.
The highly anticipated 600 MHz auction will dramatically alter the supply/demand outlook for the big four wireless companies and level out the playing field as they enter the 5G world, notes Macquarie Securities’ Amy Young.
The low-band spectrum that will eventually be re-auctioned to wireless companies will be good for both long-distances and in-building penetration, she writes in a research note.
The broadcast portion of the auction should go through the summer, though some experts predict it could take until the end of the year to complete. TV executives in earnings calls of late have been reticent to say much about their plans, citing the “quiet period” before the auction began and the desire to avoid tipping off television competitors to their strategies.
Macquarie has now revised its projections of how much the auction will raise to some $31 to 39 billion, down from a projected $55 billion to $60 billion for several reasons. “AT&T and Verizon each have a ~US$10bn budget; T-Mobile has earmarked ~US$8bn but is expected to spend significantly less; Comcast is expected to spend US$5-7bn, based on our survey of institutional investors; and Dish could spend US$3-4bn based on its leverage (although it could free up additional capacity explained below),” Young writes.
Not on the list of completed applications released May 12th were Liberty Global and Google, which are no longer expected to participate.
The reserve price has been set at US$1.25 MHz/POP; Macquarie believes spectrum in high-demand areas such as NYC, LA and Chicago could go as high as US$2+. This could crystallize the value of spectrum, to the benefit of Dish.