Andromeda auction: As bids rise above $1B, it's too early to call

The FCC's newest midband spectrum auction for 5G entered its fourth day of action Friday. But most financial analysts are warning that it's still too early to tell whether operators like T-Mobile and AT&T will fork out the astronomical sums of money they did earlier this year during the FCC's blockbuster C-band spectrum auction.

After eight rounds of bidding, the FCC's Auction 110 of spectrum between 3.45GHz and 3.55GHz has generated a total of $1.185 billion in winning bids. The agency is scheduled to hold three more rounds of bidding Friday, and then will resume bidding Tuesday.

The event has been dubbed the "Andromeda auction" by Light Reading, because it sounds cool.

According to a note issued Thursday evening, the financial analysts at New Street Research believe bidding activity in recent rounds indicates there are four active bidders, which are almost undoubtedly Dish Network, Verizon, AT&T and T-Mobile. As in prior spectrum auctions, the FCC is only releasing the amount and geographic location of each bid and not the identity of the bidder. The agency is expected to release the identity of winning bidders after the auction is over, likely sometime in January.

The big question, according to the New Street Research analysts, is whether bidders will continue to push up Andromeda auction prices in the days and weeks ahead. "It will all come down to whether bidders will hold on as prices rise, with activity likely to begin heating up next week," they wrote Thursday evening.

In a note issued to investors earlier this week, after one day of bidding, the financial analysts at Raymond James said the pace of bidding in the Andromeda auction appears to sit roughly between the 3.5GHz CBRS spectrum auction and the C-band auction of licenses between 3.7GHz and 3.98GHz. The CBRS auction last year raised a total of just $4.6 billion in bids for 70MHz of midband spectrum, but the C-band auction raised a total of $81 billion in bids for 280MHz of spectrum. The Andromeda auction promises to release around 100MHz of spectrum, although some licenses will be subject to sharing with federal users.

"A clearer path should be more evident as we get to rounds in the mid-20s and 30s," wrote the Raymond James analysts. Thus, the ultimate trajectory of the Andromeda auction may become clearer by the end of next week.

Importantly, the auction must raise a total of $14.8 billion in total winning bids in order to finance the clearing of existing federal users. If it does not reach that reserve price, winners will not get access to the spectrum and it will be considered a failed auction.

A number of prior auction participants, ranging from ATN International to Comcast to Charter Communications, are not participating in the Andromeda auction. Nonetheless, the event promises to release critical midband spectrum that is considered ideal for broad and speedy 5G networks.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano