U.S. Spectrum Auction Raises $44.9 Billion
Wireless carriers revealed their big appetite for new spectrum in the latest airwaves auction that raised a record $44.9 billion. The U.S. Federal Communications Commission offered to auction what is called AWS-3 spectrum. The airwaves auction attracted huge bids from carriers such as AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ) and T-Mobile US Inc (NYSE:TMUS). However, Sprint Corp (NYSE:S), the U.S. No. 3 carrier, did not participate in the latest auction, but plans to bid in a planned one next year.
Satellite TV provider, DISH Network Corp (NASDAQ:DISH) also participated in the latest airwaves auction. Winners in the just concluded spectrum auction will be known in the coming few days.
Although FCC and industry analysts expected the auction of AWS-3 airwaves to attract huge bids from wireless carriers and others, the amount of money that the auction raised shattered their estimates. The AWS-3 spectrum had a reserve price of $10.1 billion during the first week of bidding.
More airwaves on offer in 2016
According to Tom Wheeler, the FCC chairman, the actions of the wireless carriers in the latest auction demonstrated the huge demand for new spectrum. The FCC intends to hold another major airwaves auction in 2016 during which the coveted low-frequency spectrum will be on offer. Sprint Corp (NYSE:S), which avoided the latest airwaves auction, is expected to bid in the planned one.
FCC expects the just auctioned spectrum to add billions of dollars to the U.S. GDP, and add thousands of new jobs in the country. The last time that FCC held a major airwaves auction was in 2008.
Carriers bet big on spectrum
It is predicted that AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) placed huge bets on the just concluded airwaves auction. Analyst Jonathan Chaplin of New Street Research predicted that AT&T may have invested between $20 and $22 million in new spectrum while Verizon paid between $14 and $16 billion for fresh airwaves.
The need to decongest networks, increase in data-guzzling devices, and the desire to boost overall network quality are some of the issues pushing carriers and other providers to seek new airwaves. They are even willing to pay a premium price for new spectrum.
Google Inc (NASDAQ:GOOGL) was recently cited as considering entry into wireless phone service. The company was said to have held talks with T-Mobile US Inc (NYSE:TMUS) and Sprint, to use their spectrum for its own wireless phone service. The fact that T-Mobile sought new spectrum in the latest auction bodes well for Google as it will expand the room to share the airwave with the carrier.
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