FCC’s Upcoming Airwave Auction May Yield Less Cash Than Expected
The Federal Communications Commission is planning to conduct an auction of previously TV owned airwaves, to be bid upon by various wireless carriers looking to enhance their mobile network coverage. But due to recent slow growth in the wireless industry, as well as the ongoing price wars, some carrier bidders are rather cash strapped at the moment. This could mean that the money generated from the upcoming auction could fail to meet the expected yield.
The said auction is scheduled for late spring this year. This was made possible by several TV corporations voluntarily offering airwaves they owned in return for some money. Many industry watchers are saying that this kind of auction is a once in a blue moon type of event, and we might never see anything like this for a long time.
But early estimates of total bids only amount to $33 billion, at least according to a report by Bloomberg, who took the average of eight projections made by various industry analysts. This is easily more than ten billion dollars less than the $45 billion expected by the FCC, and way below the nearly $85 billion projected by a certain organization belonging to the broadcasting industry.
The biggest wireless carriers in the United States are expected to be participants of the auction, but it turns out that only three of the Big Four (Verizon Wireless, AT&T, and T-Mobile) will be joining, with Sprint having already expressed its intention of withdrawing from the proceedings. TV airwaves are mighty useful for mobile network providers now because they make it easier to deliver video streaming through building walls and other physical structures.
But these wireless carriers may not have anything left to spend, It is not like last year in which they still had the wallets to be able to pledge almost $45 billion in the AWS-3 auction. But now aggressive competition has taken its toll on their budgets, and they are now quite hesitant to spend more. Intriguingly, other potential bidders such as tech firms, cable operators, and satellite TV service providers are now sharing the same sentiment.
However, some are saying that there is hope yet, if some dark horse will join in on the bidding. In its report, Bloomberg has mentioned some potential dark horse participants. These include Comcast who has made a deal with Verizon Wireless in order to become a mobile virtual network operator (MVNO), cable company Charter Communications who is looking to merge with Time Warner Cable, and Mexican telecommunications company America Movil SAB who is aiming to improve its presence outside of Mexico.