Fierce Wireless reviews the big 600 MHz auction due next year, which will auction off as much as 120 MHz, between TV channels 30-50. The 600 MHz band promises to enhance LTE coverage with even better range than the current 700 MHz band.
But the number of licenses put up for auction depends almost entirely on how much the broadcasters are paid to give up their spectrum (which they never “owned” in the first place).
“If broadcasters were offered $1 per MHz POP you could see quite a lot of them might participate,” says Tim Fararr, who has his share of off the wall predictions. If it was more like $0.30 per MHz POP, then the auction might get less than 80 MHz, Farrar said. Verizon and AT&T would need to fully participate to drive up bid prices, he said.
How the final rules are written makes all the difference.
Verizon and AT&T have been agitating against rules that would restrict their participation, sparked by statements from the Department of Justice calling on the FCC to ensure Sprint and T-Mobile have ample opportunities to bid on the spectrum.
Revenues expected will largely be dependent on whether Verizon and AT&T participate. Farrar said that if they do, the auction could well raise more than $20 billion. He said he does not see Sprint or T-Mobile spending more than $5 billion each to acquire 600 MHz spectrum.
A recent nonpartisan study released by the Center for Business and Public Policy at Georgetown University found that rules that bar Verizon and AT&T from participating “could reduce auction revenues by about 40 percent–lowering federal auction proceeds from as much as $31 billion to approximately $19 billion.”
The report (pdf) warned that getting only $19 billion “could result in a funding shortfall to support the build out of the nationwide interoperable, high-speed public safety broadband network–FirstNet–mandated by Congress in 2012.”
700 MHz Spectrum Winners (2008)
The Georgetown study concludes that with $7 billion needed from the auction to deploy FirstNet, coupled with the estimated $2 billion needed for re-packing broadcast spectrum after it has been auctioned, only $10 billion of the potential $19 billion in auction revenue would remain for purchasing the broadcasters’ spectrum–and that might not be enough to pay the broadcasters for all of the spectrum they relinquish.
The Georgetown “study” might be more credible if it compared MHz per pop. In the 2008 auction, some $19 billion was raised. But the total spectrum available in 2008 was about half the anticipated spectrum to be auctioned in 2014.
In 2008, AT&T received 20 MHz, Verizon received 20 MHz and rural carriers got 10 MHz. That totals 50 MHz. In 2014, some 120 MHz could be available in the 600 MHz spectrum auction. Spectrum prices have gone up, too.
It’s not clear how the study was paid for. Presumably some PhD got a grant from a “pro business” institution.
Steve Pociask, President of American Consumer Institute Center for Citizen Research says Consumers Will Lose From Rigged Wireless Auctions. But Pociask defines “rigged” as NOT giving the duopoly free reign to control the 600 MHz spectrum. He likes duopolies.
Farrar said if AT&T and Verizon do not participate at all the auction could fail, since bids might not meet the required reserve price.
What failed was Congress.
They gave away the “D-Block” to public service and promised to fund a parallel 700 MHz cellular network dedicated solely to first responders. Some analysts say it will cost upwards of $25 billion to build the ruggedized infrastructure, manage the network and buy radios.
The FCC, by contrast, said sharing existing commercial cellular service made more sense. Priority access would give First Responders access to all the current infrastructure. Commercial cellular service is ubiquitous. It will be cheaper than FirstNet. Smaller communities won’t have FirstNet service and are unlikely to afford it – without huge government grants.
If Tom Wheeler becomes head of the FCC, you can bet that AT&T and Verizon will buy most of the available 600 MHz spectrum — and keep prices high. White space? Forget it. A viable alternative to carrier-controlled pricing could be unlikely in the Wheeler administration.
Personally, I think FirstNet will fail – just like the FCC determined. FirstNet will work great for the top 25 municipalities, but nobody else will be able to afford it – even if utilities are pressured into subsidizing the cost at above the market rates.
Consumers will end up paying the bill – either through higher (duopoly) cell phone rates, higher utility bills, or higher taxes. Or all three.
Verizon paid nearly $10B for 20 MHz of 700 MHz five years ago. Perhaps Google/Sprint could buy 40 MHz ($16B), T-Mobile 20 MHz ($10B), and Verizon and AT&T were allowed 10 MHz each ($10B total), that’s $36B total. Perhaps then, another 20 MHz could be freed up for rural broadband. Everyone might benefit from ubiquitous broadband — not just a handful of big city police departments.
Andrew Seybold appears to be one of the few to make judgements based on engineering principals. But his constituents are public service employees.
I’d like to see competition.
I’d like to see a study that analyzed the cost to the economy and society where only rich people could afford wireless broadband. I don’t think AT&T or Verizon would fund a study like that.
Related Dailywireless articles include; DOJ: Justice at 600 MHz?, FirstNet: Get Utilities to Pay for It, FCC Supports National White Space Networking , War 2.0 for Unlicensed Spectrum, FCC: TV Auction in 2014, Spectrum War: Unlicensed, Shared and Auctioned, White Space Radio using 802.11af Demoed, FCC Dishes Dirt, Talks Up 3.5 GHz, Incentive Auctions: Going Nuclear, AT&T Fears FCC’s Incentive Auction Plans, FCC Moves on TV Frequency Auction, FCC Authorizes White Space Service in Wilmington, Genachowski Lobbies for Unlicensed White Spaces, Universal Service Reform Passed