US AWS-3 auction raises record $45 billion

The US Federal Communications Commission (FCC) has closed the AWS-3 spectrum auction after 341 rounds of bidding and a record amount of money raised. The winning bids totalled $44.89 billion, way over analysts’ previous predictions which circled around $10-20 billion.

The FCC had set a reserve price for the auction, which is also known as auction 97, at $10 billion. The total number of licences was 1,614, of which 880 are Economic Area (EA) licences, and 734 Cellular Market Area (CMA) licences.

“If you had conducted a poll of analysts before the start of the AWS-3 auction, the highest prediction given for its yield would not have exceeded $18 billion,” FCC Commissioner Mignon Clyburn said. “Seventy-seven days and a record setting $44.89 billion later, Auction 97 has shown that demand for this spectrum was phenomenal.

“Some experts   opine that the winning bid total is due in large part to bidding and other competitive strategies unique to this band.  I believe one of the key factors for this unanticipated level of activity is that the AWS-3 bands are near the AWS-1 bands and there are already base stations and other equipment available.”

The auction involved 50 MHz of paired spectrum and 15 MHz of unpaired uplink spectrum 1695-1710 MHz bands. In the unpaired spectrum block A1 5 MHz of 1695-1700 was auctioned off, and 10 MHz of 1700-1710 MHz in block B1.

The paired spectrum included the following blocks and frequencies: 10 MHz of 1755-1760/2155-2160 MHz in block G, 10 MHz of 1760-1765/2160-2165 MHz in block H, 10 MHz of 1765-1770/2165-2170 MHz in block I, and 20 MHz of 1770-1780/2170-2180 in block J.

The highest bids by far were made for the paired spectrum licences, in particular the 10×10 MHz J block that is in densely populated urban areas. Unpaired spectrum generally is not seen as much value as paired spectrum. The FCC is yet to announce the winners of the auction.

*“This [auction] sets a new record for spectrum above 1GHz. On average US operators paid $ 2.21 per MHz per pop,” Stefan Zehle, CEO of telecoms advisory company Coleago Consulting said. “This is considerably higher than the average of US$1.28 / MHz / pop paid in 2008 for 700MHz spectrum and a large multiple over the AWS spectrum prices paid in 2006 (US$ 0.56 / MHz / pop). The US average is below the prices paid in the UK for 2.1GHz spectrum in 2000 at the height of the dot com boom.

The message is clear: It’s all about the coping with mobile broadband traffic in high density user environment. The Chicago licence average sets with US$ 6.11 / MHz / pop a new record for spectrum.”

FCC Chairman Tom Wheeler seemed delighted at the success of the auction and the amount of cash it raised. “Today we closed bidding Auction 97 – by far the highest-earning spectrum auction the United States has ever seen,” he said.

“But it was much more than that. This auction also marked a new era in spectrum policy, where a collaborative and unprecedented effort resulted in new commercial access to federal spectrum bands. A bipartisan group of leaders in Congress, federal agencies – especially NTIA [the National Telecommunications and Information Administration] and DoD [the Department of Defense]– the White House, industry, and the team at the FCC all came together to help meet the Nation’s demand for wireless broadband.

“Improving consumer access to wireless broadband is a priority of mine, and has been a priority of the Commission over the past five years. Now, an additional 65 megahertz of spectrum is available to improve wireless connectivity across the country and accelerate the mobile revolution that is driving economic growth and improving the lives of the American people.”

*Comment from Coleago Consulting added after first publication of this story.