Ding, Ding… Round 32 of the FCC AuctionPosted November 25, 2014 by admin
Round 32 of the FCC spectrum auction now has surpassed $36B and does not look to be stopping anytime soon. Over 500 bids have been received according to the Federal Communication Commission. Seventy companies were approved to bid on the auction.
The wildcard of the group of bidders is thought to be Dish Network. Dish has been trying to break into the wireless space for some time now. With prices being driven so high it is thought that there could be a few other well-backed bidders in the auction. Dish currently holds some valuable frequencies near the current block.
The most interesting piece to this auction is that it might be just a taste of what the next FCC auction will look like. That auction is scheduled to take place in 2016. The current block of spectrum is prone to being obstructed by obstacles like buildings and other natural obstructions. The upside is the higher frequency spectrum is able to carry loads of data.
The 2016 auction will sell part of the current TV broadcasting spectrum. This is the more optimal spectrum and will make it more attractive to the wireless carriers being in the 600 – 700 MHz bands. At Cell Site Capital we feel part of the reasons prices have been driven so high is that the 2016 auction has been pushed off twice and carriers are getting nervous when that 2016 auction will actually happen. Data is driving revenue for the carriers but also driving up the cost of the current network.
The block of spectrum covering the NYC area now will demand a $2.2 Billion minimum bid in the next round. As we previously reported, this block may reach as high as $2.4 Billion.
The other cost associated that the auction winners will need to factor in is the cost of upgrading and an increased rental cost on the current cell sites. Most of the tower companies will demand an increase in rent for the additional equipment and load requirements on the cell tower. These increases will be an ongoing cost rather than a one-time event cost. Someplace American Tower, SBA Communications and Crown Castle executives are smiling.