Spectrum Auction May Be A “Bust” Says Analyst

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gavel2“Why should national wireless incumbents even bid in this auction?” said analyst Antonio Nash from Hitachi Consulting.  Nash, in a recent article published by Multichannel News, believes the ongoing FCC spectrum auction will prove unfruitful for all parties involved. The overall value of spectrum is decreasing, said Nash, due in large part to broadcasters’ switch from analog to digital, which made spectrum usage more efficient and “redundant.”

Earlier this month, the FCC announced a higher than expected asking price of $86 billion for the 126 MHz of frequency it plans to auction off for wireless use. Nash wrote that such an asking price will most likely result in a “lengthy, cumbersome process,” one that will require several cycles before bidders clear the asking price.

Nash wrote that it is not economical for wireless carriers to bid on this spectrum due to its extremely high price and decreasing usefulness. Most analysts, he said, estimate the spectrum price to be somewhere between $30 to $40 billion, over double the current clearing price. Moreover, the 600 MHz frequency will not be used for the Internet of Things and deploying equipment using such spectrum is “very challenging and expensive.”

“The odds of an unsatisfying outcome went up dramatically with that astronomical ask, because less than one-third of the first-round clearing target is likely to come from the national wireless incumbents,” Nash said.

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