Auction action picks up, bids head past $345 million

“Now we’re going into the long tail” of the auction, says Sasha Javid, Bitpath COO and auction tracker

The 2.5 GHz auction has hit its stride with the move to four rounds of bidding per day. After a first-day total of more than $100 million, bids had been creeping up slowly in the early rounds, but the increase in daily bidding rounds has driven the total bids up to double and more than triple that first-day figure.

As of the close of Round 40, total bids stood at nearly $341.6 million; Round 41 took this to $347.3 million.

There are around 8,000 licenses available, and the number still under contention has dropped to around 300. The price appears to have settled for 7,560 licenses, with 155 having no demand.

“Now we’re going into the long tail” of the auction, says Sasha Javid, COO of Bitpath and former chief data officer and legal advisor on the Federal Communications Commission’s Incentive Auction Task Force, who tracks FCC auction activity on his blog. “The question is, how long this tail is going to go? And I think that is really up to the FCC.” Javid expects that the auction will stretch into September, but the agency could push things toward a quicker conclusion by increasing the number of daily rounds or the bidding increments. (Meanwhile, the Senate is still debating the extension of the FCC’s auction authority, which is due to run out on September 30. The House has passed a bill that extends the FCC’s auction authority until March 2024.)

This auction wasn’t expected to be a blockbuster, given that many of the spectrum licenses on offer are encumbered, particularly in urban areas that typically drive big bids by the national carriers. The greatest utility for the current 2.5 GHz licenses is expected to be in rural areas—indeed, FCC Chairwoman Jessica Rosenworcel talked up the auction specifically as one that would help to make inroads on the digital divide by providing an opportunity to “fill in some of the critical 5G gaps in rural America.” In addition, T-Mobile US has a huge head start on holdings in this band and deployment of 5G using 2.5 GHz spectrum acquired via its purchase of Sprint; plus, this auction comes last in a series of midband auctions (CBRS Priority Access Licenses, C-Band and 3.45-3.55 GHz) that have already drawn billions of dollars of carrier investment, particularly the C-Band auction.

Still, while Javid says that this auction was a difficult one to predict, the bid total is a bit more lackluster than he would have anticipated. The aforementioned factors play in, as well as the fact that the licenses are available on a county level, which has only previously been done with CBRS; some larger financial players who have joined previous auctions aren’t participating; and again, “it’s a band that T-Mobile holds most of the cards for,” he adds. “They have the leases for most of the existing licenses that are out there.” For other potential bidders, that means it’s unclear when they would get access to the spectrum they might win. It appears that encumbrances are playing a significant role in license prices; Javid says that the most encumbered licenses are seeing a more than 80% discount compared to “clean” licenses on a price per MHz-POP basis.

Since the bidding process is anonymous and winners aren’t announced until the end, it’s not possible to know exactly what’s going on with individual players—but educated guesses can be made based on patterns of activity. While Javid considered the possibility that AT&T and Verizon might participate early to drive up prices in urban areas for T-Mobile US, he says that based on the activity he’s seen, that isn’t happening. “I think they’re not doing anything in this auction,” he says. “I think what you have is T-Mobile cleaning up the licenses [it wants] and then … this auction really is about small bidders. And they’re the ones going and buying licenses in the middle of the country, and that’s where a lot of the activity is.”

There is a field of 82 qualified bidders, including the three national wireless network operators, US Cellular and Dish Wireless, bidding under the name Carbonate Wireless. There are also a significant number of small and medium-sized telecom network operators set to participate in the auction, including Carolina West Wireless, Cellular South Wireless, Copper Valley Wireless, Granite Wireless, Nex-Tech Wireless, NSight, Puerto Rico Telephone Company, Redzone Wireless and Union Telephone Company.

Those small bidders are most common in the middle of the country, where activity has been consistently elevated. But they’re not going to drive big bid totals for the auction in the way that the C-Band, driven by huge spending by Verizon and AT&T, saw a total of more than $81 billion that smashed previous auction records.

Meanwhile, Javid is also not seeing a lot of activity attributable another potential big player, Dish Network. Dish “needs to be 100% focused on the spectrum that they already have,” Javid says, because the company is in danger of losing its licenses if it doesn’t meet FCC buildout requirements (after having failed previously to meet build-out commitments). Dish being focused on build-out probably also puts some capital constraints on the company even if it were inclined to pick up a large 2.5 GHz footprint.

There are three channels available, according to the FCC band plan: Channel 1, which is 49.5 megahertz of spectrum; Channel 2 is adjacent to Channel 1 and consists of 50.5 megahertz of spectrum. There is also a smaller channel, Channel 3, which consists of 17.5 megahertz and is not adjacent to either of the other two channels. Channels 1 and 2 seem to be receiving more interest than Channel 3, with prices reflected accordingly — according to Javid’s blog, as of Round 41 around $50 million in bids has gone to C3 licenses, around $131 million to C1 licenses and $166 million to C2 licenses.

Source link

Next Post

Why 5G Hasn’t Impacted Tower Lease Rents or Sales

Thu Aug 18 , 2022
5G cell service has been heavily marketed. But despite sales pitches to property owners, 5G is not affecting conventional cell lease rents, sales or renewals, according to Varnum law firm attorneys Peter Schmidt and John Pestle. Recent cell phone publicity has been about high-speed 5G, such as for autonomous vehicles […]


COMING SOON! Signup for our newsletter, get hot news plus speical deals from us and our partners...

Best Omni-Directional on Market