The Federal Communications Commission is set this week to begin auctioning off 176, 10-megahertz spectrum licenses in the upper 1.9 GHz band known as the H-Block. The auction is scheduled to start on Jan. 22, with 23 bidders qualified to participate.
Qualified bidders include a number of entities labeled under the names of individuals as well as a handful of established telecom operators like Ntelos, NE Colorado Cellular and Puerto Rico Telephone Co. Eleven entities failed to qualify, including Cellular South and Union Telephone Co.
As with past spectrum auctions, the FCC plans to provide round-by-round updates on the bidding with three, one-hour rounds scheduled per day. However, the bidding will be anonymous, which means that while the amount bid will be released, the actual bidder will not be revealed until the auction is completed. The licenses will include spectrum in the 1915-1920/1995-2000 MHz bands and will be split into 176 “economic areas.” H-Block license winners will also be required to meet build out requirements of 40% population coverage within four years and 70% coverage within 10 years.
The list of the 23 qualified bidders lacks the usual big names that typically crowd around spectrum auction, with many of those players having announced they would bypass this event. With just 10 megahertz of total spectrum up for bid, the spoils could be not worth the effort. The most surprising non-participant is Sprint, which already controls the adjacent G-Block spectrum that it obtained as part of the 800 MHz spectrum re-banding initiative. Sprint noted last November that it would bypass the auction as it looks to instead save its resources for acquiring sub 1-GHz spectrum.
That pursuit of lower spectrum was also touted by the likes of T-Mobile US, which earlier this year announced a significant spectrum swap with Verizon Wireless that will see the nation’s No. 4 carrier pick up a substantial haul of 700 MHZ A-Block licenses.
Many operators have said they plan on instead participating in the FCC’s AWS-3 auction that is expected to commence later this year, which includes a total of 50 megahertz of spectrum in the 1755-1780/2155-2180 MHz bands. That spectrum is adjacent to the 1.7/2.1 GHz spectrum bands currently used by a number of carriers to support LTE rollouts.
And of course, there is also the specter of the FCC’s plans to auction spectrum in the 600 MHz band through an incentive auction process that the government agency recently postponed until mid-2015. That auction is expected to see serious money bid as the spectrum propagation characteristics allow for large coverage areas using a minimum of cell sites as well as superior in-building penetration compared with higher spectrum bands.
Another potential barrier for participants was the proposal by Dish Network that it would bid a minimum of $1.5 billion for the H-Block if the FCC would in turn allow Dish to combine that band with its 30 megahertz of spectrum adjacent in the 2 GHz band for downlink transmission instead of having to split the spectrum channels for two-way traffic. The FCC late last year approved the proposal with some conditions.
The spectrum included in the H-Block was part of Dish Network’s spectrum holdings prior to the FCC allowing Dish to use some of its spectrum in the 2 GHz band initially set aside for satellite services for a terrestrial network. In allowing Dish to use that spectrum for the terrestrial network, it was forced to give up 10 megahertz of its 40 megahertz total back to the FCC. As part of its agreement with the FCC, Dish was able to postpone initial build-out requirements that originally called for the company to build out the 30 megahertz of spectrum it now controls covering 40% of the population in those markets within four years and 70% of the market within 10 years.
Dish Network has been very active over the past 12 months in attempting to garner either a partner or scale in looking to enter the wireless communications space. Dish early last year initially countered Sprint’s attempts to acquire full control over Clearwire, beginning a bidding war that Sprint eventually won. Dish also looked to challenge Japan’s Softbank’s eventually successful acquisition of a controlling stake in Sprint. More recently, Dish Network Chairman Charlie Ergen has made noise about a possible partnership with T-Mobile US as well as earlier this year pulled out of an attempt to acquire control of LightSquared’s 1.6 GHz spectrum assets.
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