AWS Auction: Could It Bring Dish & T-Mobile Together?

The FCC's Advanced Wireless Services (AWS-3) auction in November could be a potential catalyst to future collaboration, or even merger, talks between Dish and T-Mobile.

Initial details about the November 13 auction started to trickle in this week. According to Federal Communications Commission (FCC) documents, 80 interested parties, including the satellite provider and a wolverine, have thrown their names into the ring to potentially bid on AWS-3 spectrum in the FCC's November auction.

AT&T Inc. (NYSE: T), Verizon Wireless , T-Mobile US Inc. , Dish Network LLC (Nasdaq: DISH) and a number of small telcos, including the nominally notable Wolverine Wireless, are amongst those slated to participate.

Notably absent is Sprint Corp. (NYSE: S), which stated last month it would save its cash for next year's auction of low-frequency spectrum.

The FCC will begin the auction on November 13, selling off airwaves that used to be allocated to federal users like the Department of Homeland Security. It will include 65MHz of 1.7/2.1GHz spectrum and 50MHz for paired channels that are good for 4G LTE service delivery.

Not all 80 interested parties will necessarily bid -- 47 submitted incomplete entries that must be corrected by October 15 -- but the FCC expects to raise $10 billion from this process.

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Why this matters
Dish said in July that it's interested in both the AWS auction in November and the low-band incentive auction planned for next year. The appeal for Dish is that the satellite provider holds 50MHz of spectrum in the US: 40MHz in the AWS-4 (2000/2200MHz) band and 10MHz in the H-Band. Winning some of the AWS-3 (1710/2180MHz) spectrum would give Dish more bandwidth to interoperate with LTE services on the AWS-1 (1700/2100MHz) spectrum and potentially work with its AWS-4 spectrum in the future, although it will have to work with other carriers to make that happen.

T-Mobile is also interested in the AWS-3 auction. The carrier started its LTE deployment on AWS-1, so AWS-3 would give it more spectrum to play with.

The AWS auction could also spur more speculation around a Dish/T-Mobile merger. As the operator's CFO, J. Braxton Carter, noted in August, the combined AWS and H-Band holdings of Dish and T-Mobile would enable them to deploy massive LTE channels for faster video streaming and other applications. "We could certainly very rapidly deploy on his [Dish CEO Charlie Ergen's] spectrum," Carter said in the summer. (See T-Mobile CFO Eyes Dish, Growth Opportunities.)

Non-bidder Sprint has its fair share of network problems, but spectrum isn't one of them right now. With its Clearwire assets, Sprint holds more spectrum than any of its US competitors, but it doesn't currently have any in the AWS band. It makes sense technologically and financially to sit this auction out while its competitors -- especially the smaller, rural operators -- see a much more urgent need to acquire spectrum to improve capacity in their networks. (See Open Spectrum Auctions Open Door to Growth.)

This will be a really important auction for both the FCC, which will raise considerable funds, and for the operators that win spectrum. Rural operators are getting the chance to build on licenses in specific geographies that just cover their footprints, giving them a better shot against the cash-rich big guys, so there could be several winners next month.

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— Sarah Reedy, Senior Editor, Light Reading

kq4ym 10/6/2014 | 9:15:24 AM
T-Mobile-Dish? It will be interesting to see what happens in the auction, and just how much the bands sell for and if the $10 billion is reached or exceeded. I'm wondering if there would be any ant-trust issues if Dish and T-Mobile end up with lots of new spectrum and then merge. 
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