The Federal Communications Commission, the U.S. government entity that regulates broadband, has announced that for the first time in five years it will auction a portion of broadband spectrum. The auction, which is set to begin in January 2014, will offer 10 MHz in the PCS H block, at a minimum price of US $156 billion. Some of the proceeds will go to fund a national LTE network for first responders such as fire and police departments. This slice of H block will be the first tranche of the 65 MHz of spectrum that the FCC is mandated by law to license by 2015.
Undoubtedly, the exponential growth of data hunger, especially in sophisticated, high-population-density countries like the U.S., has been creating demand among MNOs for more spectrum, so as to be able to provide faster speeds and more app-driven special services for their customer base. After five years of lockdown on spectrum availability, that demand can only be described as pent-up. We think the FCC’s move comes at an opportune time for the mobile industry in the U.S. The only cavil is that the size of the auction is relatively small—at 10 MHz, it is likely small enough that the field of bidders will be limited. In fact, bids for it may well come only from those entities that already have significant holdings in adjacent portions of the broadband spectrum, namely Sprint and Dish.
Nonetheless, the prospect of further spectrum auctions in the near future bodes well for operators. Moreover, the arrival of greater portions on the market at various frequencies of the spectrum—not just those that are known to be keenly sought after by industry giants—holds out the possibility that smaller providers may be able to afford to bid, increasing diversity and competition in the mobile marketplace.