Auction Came Up Short Due to ‘Sharpened’ Demand by Carriers

Inside Towers Interview with Vertical Bridge CEO Alex Gellman

Why did the nearly $20 billion in gross revenues from the FCC’s incentive auction come in at around half of what had been originally predicted by a myriad of analysts? Timing and the evolution of the carrier’s needs, according to one expert.

FCC officials told reporters last week the auction had been in the works for five years under four different Commission chairmen, beginning with Julius Genachowski. In between then and now, “there’s been an evolution” of how carriers want to use their spectrum for next-gen services, Vertical Bridge co-founder and CEO Alex Gellman told Inside Towers in an exclusive interview.

“If this auction had happened five years ago there would have been more demand,” he said, adding the last two auctions “sharpened” the carriers’ thoughts. While 600 MHz repack spectrum works great for rural areas and is good for building out a network, “it doesn’t work as well for ‘dense demand’” and carriers now want higher frequencies for 5G. 

Some Wall Street analysts believe the AWS-3 auction in 2015, which garnered $44.9 billion in gross bids, was held too close to this one and fulfilled much of the carriers’ low-band spectrum needs; Gellman agrees.

In the meantime, the 39-month repack clock has begun and TV stations need to assess their repack engineering needs now. What can stations do now? “Get on it; If you plan to stay on the air, get resources now to do that rather than be sweating it out three years from now as tower crews get booked,” advised Gellman.

Mr. Gellman will be speaking at the Wireless West Conference today at 1:30 p.m. PST on the General Session panel entitled: “5G, IoT & Me.”

By Leslie Stimson, Inside Towers Washington Bureau Chief

April 20, 2017

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