Presence of Dish, Absence of Comcast, Charter, Among Few Surprises in High-Band Auction
Dish Network filed applications to bid in both upcoming high-band auctions. Comcast and Charter Communications didn’t file at all, nor did any major tech players, based on a further review of applications. Cox did file. The FCC released its list of companies that filed short-form applications for both auctions Wednesday, including those accepted and those requiring changes (see 1810100073). The four major national wireless carriers filed, as did U.S. Cellular. There was a smattering of requests by smaller carriers, plus by telcos Frontier and Windstream.
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The 28 GHz auction starts Nov. 14 with two licenses of 425 MHz each available to serve less than 25 percent of the U.S. population, based on New Street Research’s calculations. Verizon owns 76 percent of the band in top-50 markets, 54 percent nationwide, and is most likely to emerge as the major bidder, New Street said.
The 24 GHz auction is next with seven 100 MHz licenses auctioned nationwide. Industry officials see that band as the best candidate for T-Mobile, and possibly Sprint, to pick high-band spectrum. Despite their pending deal, T-Mobile and Sprint can bid as separate entities. AT&T and Verizon already have 39 GHz spectrum, which isn’t part of the auction.
“It’s hard to imagine that Dish is still in the spectrum acquisition mode when they still haven’t started using any of what they already have,” Craig Moffett of MoffettNathanson told us. “They really do seem to be heading down the path of building a network rather than simply selling what they have accumulated.” The number of bidders, as always, is “everything,” the analyst said. “That the cable operators, mostly, didn’t show up means we can cross off at least one potential group of bidders. This auction will be a real nail-biter, because without the cable operators, with AT&T burdened with the debt of the Time Warner transaction, with Sprint and T-Mobile still chasing their merger, and with Verizon likely only a modest player given how much millimeter wave spectrum they already have, there may not as much demand as the FCC might have hoped.”
"The least surprising bidder” is Verizon, which spent $3.1 billion to purchase Straight Path in February and $2 billion for XO in 2017, both bringing millimeter-wave spectrum, BTIG's Walter Piecyk said. “T-Mobile’s decision to bid in a FCC-run spectrum auction, while it has a proposed merger in front of the FCC, is simply good politics.” The analyst noted Sprint made an incomplete application for the 24 GHz auction. “It’s doubtful that Sprint would be aggressive,” he said. “This is the first time in recent history that Sprint has filed to participate in an auction, assuming it fixes the error.” Piecyk said Verizon is facing increasing competition from T-Mobile "in markets where Verizon previously dominated.” The smaller carrier "is opening new stores and deploying low-band spectrum it recently bought at an FCC auction at a much faster rate than most anticipated and it’s starting to show up in T-Mobile’s post-paid gross addition growth.”
New Street's Jonathan Chaplin said the biggest surprise was Dish filed and major cable operators didn’t. “If Comcast and Charter had registered, it would have been supportive of our thesis that they will have a much bigger impact in the wireless market than most expect; however, not registering doesn’t demonstrate a lack of commitment to wireless,” Chaplin said. He noted both are more focused on the 3.5 GHz band and the C-band if it becomes available: Dish’s application shows it isn’t close to a deal with any of the other companies that registered. Chaplin expects Verizon to dominate the 24 GHz auction and predicted T-Mobile could be active in the 28 GHz auction. T-Mobile “has very little” high-band spectrum, he said. “This is their shot. If they get none, they may be at a long-term disadvantage to Verizon and AT&T.”
Citi’s Michael Rollins wrote that applications from Frontier and Windstream suggest “fixed wireless broadband could work across a larger geographical footprint” and a “willingness to consider fixed wireless suggests they recognize the need to upgrade their residential broadband capabilities.” Rollins didn't expect cable to mostly sit this out: “Millimeter wave spectrum could improve the ability for a cable MVNO to offload traffic in high-usage areas or provide a path for broadband footprint expansion.”