- The FCC’s AWS-3 reauction kicks off tomorrow, putting 200 licenses on the block
- It’s a chance for AT&T, Verizon and T-Mobile to add more spectrum to their inventories
- Everyone will be watching to see how aggressive SpaceX gets in the bidding
The AWS-3 auction, aka Auction 113, gets underway tomorrow at the Federal Communications Commission (FCC), putting 200 licenses back on the block. This time, AT&T, Verizon and T-Mobile will return to the table, with SpaceX looming as the biggest wildcard.
Specifically, the event will auction Advanced Wireless Services (AWS) spectrum licenses in the following bands: 1695–1710 MHz, 1755–1780 MHz and 2155–2180 MHz, collectively known as “AWS-3” bands. Auction proceeds will go toward the Rip and Replace fund, which reimburses operators that are required to rip out Huawei and ZTE gear.
These licenses were already auctioned once – way back in the 2014-2015 era, when Dish (now EchoStar) bought the licenses through two designated entities (DEs): Northstar Wireless and SNR Wireless. The FCC later decided these entities didn’t qualify for DE discounts and Dish was forced to return about 197 licenses to the commission. Years of litigation followed.
Late last week, the FCC and EchoStar said they reached an agreement where EchoStar agreed to drop a lawsuit it had filed last year in the U.S. Court of Appeals for the Tenth Circuit in Denver. EchoStar will still be on the hook for a shortfall payment if the AWS-3 reauction brings in less than $2.9 billion, per a Broadband Breakfast report.
Analysts sound confident that the auction will fetch more than that. The 17 applicants that qualified to bid in the auction include AT&T, T-Mobile and Verizon, as well as some regional carriers. EchoStar, under the name Conundrum Wireless, is also participating, presumably to goose prices.
But the one to watch is SpaceX: both for what it does and doesn’t do. Just because SpaceX qualified to bid doesn’t mean it will, or that it will win licenses. However, it certainly would seem to have the means to drive up prices and at the very least, bring pressure to the bidding process.
Recon Analytics founder Roger Entner reminded us last month that in 2008, Google bid in the 700 MHz auction and it didn’t win a single bid; however, it managed to accomplish what it set out to do, which was to ensure open access rules were enacted.
A similar strategy could apply to SpaceX, Entner said, noting that SpaceX might not win licenses but use the process to get acquainted with the auction process ahead of the bigger prize: the upper C-band auction in 2027.
Entner said the traditional providers – AT&T, T-Mobile and Verizon – are likely to be the highest bidders in the AWS-3 auction, which is a hodgepodge of markets across the country.
Markets up for grabs
AT&T has the least amount of mid-band spectrum compared to its two biggest terrestrial rivals, which is why some analysts expect it will be the big spender in Auction 113. AT&T was the biggest bidder in the first AWS-3 auction, pledging more than $18.2 billion for 251 licenses.
All three nationwide carriers have deployed Band 66, which includes AWS-3. New Street Research (NSR) looked at Band 66 holdings for each of the operators to get a sense of who will bid most aggressively for each license.
NSR focused its analysis on the four licenses in three large markets that account for 85% of the value of the licenses being auctioned: New York, Chicago and Boston.
“The scenario with the highest bidding tension would see all three carriers trying to get as much as possible, as well as the tension increased by others, such as SpaceX,” wrote NSR analyst Blair Levin in a May 18 report for investors.
According to Levin, SpaceX might bid in the auction for multiple reasons. At a minimum, registering to participate itself creates some bidding tension and it can drive up the price of the licenses for everyone participating. Or it could buy up spectrum to show wireless carriers that building a facilities-based 6G terrestrial network is an option for Starlink, which could help in its efforts to obtain an MVNO agreement.
SpaceX and secondary markets
If SpaceX decides to bid, it may target secondary markets, where its direct-to-device (D2D) service is more likely to work. In fact, the AWS-3 spectrum could be especially useful for uplink purposes, said Armand Musey, president and founder of Summit Ridge Group.
For that matter, AT&T, T-Mobile and Verizon may be interested in AWS-3 for similar reasons.
“The idea of using AWS-3 for uplink to support 5G wasn’t even in anyone’s imagination in 2014-2015, when that first auction happened,” Musey told Fierce. “You might see some people looking at AWS, particularly the uplink, for pairing it with higher frequency downlink.”
Whether SpaceX bids for the largest markets, secondary ones or none, it will certainly be an auction worth watching.