Smaller spectrum holders are going to face challenges as they decide whether to build out or sell in their markets.
At last week’s Spectrum Marketplace event in Denver, nearly every spectrum holder in the room said their business decisions would be impacted by AT&T Mobility’s and Verizon Wireless’s moves.
Things have changed since the old days of the PCS auctions, when smaller players could speculate on raw spectrum and be fairly certain someone would want to buy it.
Today’s winning bidders in the AWS and 700 MHz auctions need a plan, according to three very smart men I interviewed at the event: Kevin Reidy of RBC Daniels; Scott Soden of Alpina Capital; and Scott Wills of Trifocal Spectrum. Wills was instrumental in operating Aloha Partners, which cobbled together a lot of 700 MHz spectrum before selling it to AT&T Mobility for more than $2 billion. Reidy and Soden put together wireless M&A deals.
Spectrum is always valuable, and will continue to be as service providers need more bandwidth to operate complex content services. But carriers don’t really want to do any long-term spectrum leases with smaller spectrum owners because in essence, they end up financing the spectrum holder’s assets. So a momand-pop spectrum holder really needs to figure out whether to build a network or sell. And even selling isn’t a simple alternative today.
Nationwide carriers have a lot on their plates right now and likely aren’t interested in buying spectrum on a small-scale, market-by market basis. One need only look at the latest purchases of smaller carriers (that really weren’t that small) to see proof of that.
Spectrum holders looking to build their networks need to be well-versed in technology and business issues, as well as know the competition. Partnering with similar spectrum holders and technology companies is probably a good idea. It might be difficult to give up some control, but it’s too difficult to go it alone these days.
Several speakers also hinted at the disconnect between what small spectrum holders think their asset is worth and what carriers are willing to pay. In other words, even though bids got pretty high during the 700 MHz auction, operators aren’t going to pay those prices in the private market.
