The first stage of the Federal Communications Commission’s 600-MHz auction, clearing former TV broadcast spectrum, might end soon, with some indication of how much spectrum TV broadcasters are willing to give up, and therefore setting minimum bids for the follow-on auction to mobile service providers.
The forward auction is expected to begin in July 2016, and might--some observers believe--generate about $30 billion in bids on the low end, and possibly as much as $70 billion on the high end.
Perhaps more than has been the case in important mobile spectrum auctions, alternatives will be part of the bidding calculations participants make. More than is typically the case, other options for gaining spectrum arguably exist.
T-Mobile US widely is expected to be sold, at some point, so acquiring T-Mobile US not only gives the buyer spectrum assets, but also operating cash flow and customer base.
Sprint has excess spectrum it almost certainly would be willing to sell, and many now believe Dish Network eventually will sell all of its mobile spectrum assets as well. Some day, Sprint itself will be sold, many speculate. That also would allow a buyer to acquire rich spectrum assets.
Coming, eventually, is lots of millimeter wave spectrum useful for adding capacity, if not necessary coverage.
One consideration everyone will be watching: will Comcast try and acquire spectrum? Some think that would be a tip off about Comcast’s expected entry into the U.S. mobile basis, as it initially could operate as an MVNO, though nobody expects that as a permanent solution.
Comcast also is viewed as a prime candidate to eventually buy one of the weaker U.S. mobile carriers, probably T-Mobile US.
New Street Research now expects both Comcast and "maybe" Charter to launch nationwide U.S. mobile service mobile service using their MVNO agreements with Verizon, as early as this year.
"We expect cable companies to launch commercial wireless offerings over the next twelve months, with Comcast likely leading the charge," New Street Research predicts.
Cable operators could provide wireless services to 20 percent of their residential customers in the next five years, New Street said in a "very conservative" prediction, stealing 35 million customers from incumbent cellular companies, Fierce Wireless reports.
That would give cable operators 13 percent of the U.S. wireless market, leading to slower growth for T-Mobile US and a one percent decline in Sprint subscribers over perhaps five years.
"We would expect them to roll the product out gradually at the outset; however, once they get going, they could take share pretty rapidly."
Carriers could lose between $1.8 billion and $3.8 billion in EBITDA to cable companies during that time, New Street said, with Verizon and AT&T seeing a seven percent to nine percent reduction in EBITDA in 2021.
T-Mobile would see EBITDA growth fall from 13 percent to 9 percent, while Sprint would see growth fall from five percent to roughly zero.