Verizon & AT&T Win 700 MHz Sweeps
The 700 MHz auction 73, which closed on Tuesday evening, broke records for the government agency, bringing in over $19.5 billion for the spectrum, which is considered desirable for 4G services because of its long range and the ability of the signal to penetrate walls. The spectrum is being freed up as analog TV broadcasters move to digital, something that is mandated to happen by February 19th, 2009.
The C-block spectrum garnered an overall bid of $4.74 billion, enough to trigger the open access rules that Google (Nasdaq: GOOG) lobbied hard to be applied to the bandwidth. Verizon will likely to be able to use the nationwide spectrum footprint to deploy next-generation Long-Term Evolution (LTE) services in the coming years.
AT&T, meanwhile, won 227 licenses from the regional coverage areas in the B-block of spectrum. This will supplement the 700 MHz spectrum that Ma Bell bought from Aloha Partners already. (See AT&T Bags 700 MHz for $2.5B.)
The FCC says that Google bid but didn't win any licenses in the end.
The winners of the auction won't be closing their wallets just yet, however, since analysts estimate it will cost billions to deploy these networks. Although Verizon and AT&T will be able to reduce some costs by using existing towers for 700 MHz deployments.
"If you assume they will have to have a tower every 3 to 5 miles or so, they will likely need at least 200,000 to 250,000 towers to achieve the same coverage as current cellular networks, says Jack Gold at J. Gold Associates.
"At about $50,000 per tower, that’s about $10 billion just to put up towers. Add to that the cost of deploying new devices for the band, marketing ad sales efforts, etc., and you can probably multiply that by at least 10 to 20. So the overall cost is in the hundreds of billions ultimately."
"It will probably take them 2 to 3 years to reach any kind of installed base, in the highly populated areas, and at least 4 to 5 years to spread out to more remote areas," Gold says.
— Dan Jones, Site Editor, Unstrung