Verizon Taking Pause on Incentive Auction Outreach at FCC
With a key public notice up for a vote at the FCC Thursday, Verizon has been absent at the commission on any aspect of the long-awaited TV incentive auction. Industry officials say Verizon’s lack of recent advocacy at the very least creates a question mark for the auction of highly desired low-band spectrum. While Verizon had been active at the commission the first half of the year, its last ex parte filing in docket 12-268, a key auction docket, was made June 13, records show.
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In contrast, AT&T and T-Mobile have been actively lobbying the FCC to tweak the auction public notice, set for a vote Thursday. One theory on Verizon’s lack of activity is that the carrier has little faith the incentive auction will start in early 2016, the latest target date, so the carrier has gone big in the AWS-3 auction, buying guaranteed spectrum and helping push bidding to record levels -- above $41 billion, industry and FCC officials said. Verizon had no comment, a spokesman said.
Recon Analytics analyst Roger Entner said he wouldn't read Verizon’s lack of activity at the FCC as a sign the carrier won’t be an active bidder in the incentive auction. “I think they said what they wanted to say,” he said. “In the end, everyone needs spectrum. … I don’t think the incentive auction will fail because of a lack of interest from the carriers.”
Entner said the greater challenge is getting broadcasters to participate in the auction. NAB's lawsuit challenging the auction rules could be a blessing in disguise for the FCC, he said. The suit “gives the FCC more time to drum up support from the broadcasters,” he said. “With the current support, it would be very difficult to see how this auction would proceed.”
Goldin Associates Managing Director Armand Musey said it probably makes sense for the FCC to further delay the spectrum sale. “AWS-3 auction estimates were $12 billion to $20 billion,” he said. “The bidding is now near $42 billion and still not over. Somehow the industry has to find at least another $22 billion to $30 billion to pay for all of this and that may take some time.”
BTIG analyst Walter Piecyk said he's skeptical the incentive auction can be completed in 2016. “After spending over $42 billion in the AWS auction, the industry might need to replenish its coffers before moving forward with the incentive auction,” he said. Paul Gallant, analyst at Guggenheim Partners, said he doubts the lack of lobbying reflects Verizon views that a 2016 auction won't happen. “Even if that date later gets pushed out, the PN is live now,” Gallant said. “One possibility is other carriers are hitting the same issues Verizon cares about in the PN.”
Meanwhile, industry appears to be making little headway on two of the issues that have seen the most lobbying so far, FCC officials tell us. AT&T has been urging the FCC to remove from the notice a preliminary determination that the cleanest blocks of spectrum should be set aside for competitors rather AT&T and Verizon (see 1412080075) in the non-reserve spectrum blocks.
T-Mobile wants the FCC to remove a proposed second trigger amount of $1.25 per MHZ/POP that must be met for a block of spectrum to be sold in the auction, beyond the reserve price. While AWS-3 bidding has pushed prices above $2.50 per MHZ/POP, T-Mobile wants the trigger to be eliminated. FCC officials told us both provisions as proposed by Chairman Tom Wheeler are likely to remain as part of the notice when it gets a vote Thursday.