There may not be much interest in T-Mobile's 800MHz auction

T-Mobile officials said the company will finish auctioning a chunk of nationwide 800MHz spectrum sometime this fall. But there may not be much demand for that kind of spectrum.

"I have a hard time seeing who else would necessarily step up," Brian Goemmer, with spectrum-tracking company Spektrum Metrics, told Light Reading.

Other industry executives, who asked to remain anonymous, agreed.

Goemmer said that the obvious candidates to purchase T-Mobile's 800MHz spectrum – Verizon and AT&T – likely would have to buy and install new radios into their networks in order to begin using it. That would probably involve billions of dollars in infrastructure and installment costs and likely wouldn't be worth the slight boost in coverage that T-Mobile's 13.5MHz chunk of 800MHz spectrum would provide. Moreover, AT&T and Verizon have both signaled a desire to reduce spending on their respective wireless networks.

Cable companies Comcast and Charter Communications aren't likely buyers either, according to analyst Roger Entner with Recon Analytics. They've slow-walked the deployment of their 3.5GHz CBRS spectrum holdings, and Comcast has signaled an interest in selling its 600MHz spectrum.

A dark horse like Amazon or Starlink could emerge. But that hasn't happened in past FCC auctions, and there's no clear reason why things would change when Amazon has already begun building a nationwide IoT network called Sidewalk in a sliver of the unlicensed 900MHz band.

One potential buyer mentioned by several executives: utilities. Indeed, T-Mobile has already identified engineering giant Burns & McDonnell as a potential buyer of its 800MHz holdings.

In a court filing last year, Burns & McDonnell said it "plans to unlock consumer choice by making spectrum available to those in need, such as regional carriers and Internet providers (particularly in underserved and unserved areas), in addition to working with partners to modernize our aging [utility] infrastructure and enable private networks for utilities so they can offer enhanced services to their customers."

However, it's not clear whether Burns & McDonnell will cough up the $3.6 billion opening bid T-Mobile is placing on the auction. That's the price Dish Network says it now cannot afford.

Dish purchase unlikely

The story of T-Mobile's 800MHz auction starts with its purchase of Sprint, which closed in 2020. To get that deal approved, the company inked a complex agreement with Dish Network that regulators hoped would position Dish to take the place of Sprint as a fourth nationwide wireless network operator in the US. As part of that agreement, T-Mobile agreed to give Dish roughly three years to purchase its unwanted 800MHz.

Dish has made progress toward its goal of replacing Sprint as the fourth wireless operator in the US. So far, the company has dropped roughly $6 billion to build a 5G network based on open radio access network (RAN) technology, which now covers more than 240 million Americans.

However, Dish's business is now careening toward bankruptcy, and the company has signaled that it probably won't be able to raise the funds necessary to buy T-Mobile's 800MHz licenses.

"Due to the relatively short time remaining before the 800 MHz purchase option's expiration on April 1, 2024, we no longer believe it is a probability that we will exercise the option. Therefore, we reduced the probability weighted value of the spectrum option to zero," Dish told the SEC last month.

Dish had extended its deadline – from June 30, 2023, to April 1, 2024 – to raise the cash necessary to buy T-Mobile's spectrum. The company even made a $100 million down payment for the spectrum in October.

Thus, if Dish is unable to secure the financing, it will likely forfeit that down payment.

"Dish has until April 1 to exercise that option. And while what they inferred in their 10-K [SEC filing] is that the likelihood is down, they still have that time," T-Mobile CFO Peter Osvaldik said at a recent investor event. "So what we're obligated to do, should they not exercise that option, is to take the spectrum to auction with a floor price of just under $3.6 billion. We haven't commenced that auction yet, but should they choose not to exercise it, that'll be the next step for us."

Osvaldik said T-Mobile expects to complete its auction in the fall.

No buyers for other spectrum

According to Goemmer, with Spektrum Metrics, the 800MHz spectrum doesn't fit neatly into T-Mobile's network, and therefore the company likely does not want to keep it. But it may not find a buyer. Goemmer said his firm is preparing a detailed report on T-Mobile's 800MHz holdings.

Several companies are already offering similar spectrum holdings. For example, no buyer has emerged for Ligado Networks' L-band spectrum holdings in the 1525-1660.5MHz range. However, those licenses have long been tied up in concerns over interference.

Separately, MidWave Wireless said it owns spectrum in the 1.4GHz band and is offering it for connections between smartphones and satellites. And NextNav owns nationwide spectrum licenses in the 900MHz band, which it is using to build a network that improves the accuracy of GPS signals with indoor and vertical information.

So far no big company has emerged to purchase those spectrum assets.

Utilities are a question mark

Some utilities in the US have shown interest in buying spectrum on a regional basis. For example, Memphis Light, Gas and Water (MLGW) is spending $27 million to buy a chunk of 600MHz spectrum in the pursuit of a private wireless network.

Similarly, Anterix holds spectrum in the 900MHz band and has been leasing or selling the spectrum to utilities like Ameren, SDG&E, Evergy and Xcel Energy. According to the financial analysts at B. Riley Securities, ComEd (an Illinois utility), Eversource (which provides energy in Connecticut, Massachusetts and New Hampshire), and National Grid (offering natural gas and electricity in New York and Massachusetts) all may be close to inking additional deals with Anterix.

Thus, it's unclear whether utilities would be interested in T-Mobile's nationwide 800MHz holdings, given their other options. Utilities generally operate in just one state or across a handful of them and therefore wouldn't be interested in nationwide spectrum. Moreover, utilities generally don't operate high-bandwidth applications – meaning, T-Mobile's 800MHz spectrum might provide them with more capacity than they need.

It's not clear how T-Mobile will conduct its 800MHz auction, including whether it will break up its licenses into regional areas.