After the FCC’s first two millimeter wave spectrum auctions, last year, attracted limited investment, its third sale looks set to generate higher revenues than expected.
The main, ‘clock’ phase of the two-stage auction – the FCC’s biggest sale of high frequency spectrum to date – has now ended, providing strong indicators of the final result. The second phase focuses on the exact frequencies and locations each successful bidder will negotiate.
Auction 103 spans the upper 37 GHz, 39 GHz, and 47 GHz band, following on from Auction 101, in 28 GHz, and Auction 102, in 24 GHz. In the most recent process, gross bids reached $7.6bn during the clock phase and 99.9% of available licences were snapped up. Though the winning companies will not be announced until the end of the event, the $7.6bn total is twice some forecasts. In October, for instance, Wall Street research firm Raymond James predicted the sale would generate about $3bn in total bids, claiming there was “not much treasure” in the process.
Tim Farrar, analyst with TMF Associates, was closer to the mark when he said, ahead of the start of the auction, that it could reach $7bn-$8bn based on the results of previous mmWave sales, but since AT&T and Verizon had already bought significant assets in 28 GHz and 39 GHz, that could dampen enthusiasm and reduce the end total to about $5bn.
The list of bidders was shorter than some had expected, with few new entrants, and so the big two telcos are expected to walk away with the biggest hauls, supplementing their mmWave holdings to stay ahead of rivals in their ability to add significant new capacity and speed to their networks in future, to support hotspots such as stadiums or particularly demanding applications like immersive reality.
The relatively small pool of bidders, combined with the large amount of spectrum on offer (a total of 3,400 MHz across the three bands) could have deflated prices so the final result suggests a rising interest in high frequency spectrum to allow operators to differentiate their speeds, and target high value applications, well into the future.
That demand was lower, even last year, when Auction 101 raised $703m in total bids, and Auction 102 raised $2bn. Verizon, AT&T and T-Mobile were the main purchasers.