Demand strong in first round of Andromeda auction

The early results are in, and demand appears strong in the FCC's latest auction of midband spectrum for 5G.

First-round results in the auction totaled $609 million. According to FCC data, demand for spectrum across the country mostly outstripped supply, which led some financial analysts to conclude that Verizon, AT&T, T-Mobile and Dish Network are all participating in the event.

"It looks like four national carriers are each bidding for 40MHz [the maximum amount allowed for each bidder], with some additional demand from regional players and financial bidders," the analysts with New Street Research wrote in a note to investors Tuesday. Such midband spectrum is considered ideal for 5G.

AT&T is widely expected to be the most aggressive bidder in the auction. However, it remains unclear whether T-Mobile, Verizon and Dish will pursue spectrum licenses as well. "We don't know whether Verizon will drop out (which is our base case). If they don't, [total bidding] prices may land at $35 billion, rather than the $25 billion we and consensus expect," the New Street analysts wrote.

The FCC's auction of 100MHz of spectrum between 3.45GHz and 3.55GHz – dubbed the "Andromeda auction" by Light Reading – started Tuesday and will continue until bidders stop bidding. The agency is releasing information on the amount of bids that are placed in the auction, but not the identity of the bidders. The auction ought to last for several weeks at least, and the FCC is expected to release the identity of the winners sometime in January.

The Andromeda auction carries a $14.8 billion reserve price, which is the cost necessary to remove existing federal users out of the band. If the auction does not generate a total that exceeds that reserve price, bidders won't get any spectrum and it will be considered a failed auction.

The Andromeda auction comes less than a year after the FCC's blockbuster C-band spectrum auction. That event blew past all expectations, ending with a total of more than $80 billion in winning bids. However, the C-band auction released a total of 280MHz of spectrum, whereas the Andromeda auction will release just 100MHz.

The first round of the C-band auction generated $1.7 billion in total bids, far lower than the $609 billion generated by the first round of the Andromeda auction.

Related posts:

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