Level of Bids From Verizon, Dish Yield CBRS Auction Surprises

The results of the FCC citizens broadband radio service auction announced Wednesday 2009020029) were largely as expected, with Verizon and major cable operators dominating (see 2007200049). Dish Network also came in big, which was more of a surprise (see 2008260055). Southern California Edison also gobbled up priority access licenses (PALs).

Smaller players, including wireless ISPs, also bid but at a smaller level than the big players. The auction closed at $4.54 billion, or just over 20 cents MHz/POP for licenses sold. Chairman Ajit Pai called it a "successful 3.5 GHz auction."

“While I am still parsing through the data, this auction looks to have played out as I envisioned it could,” emailed Commissioner Mike O’Rielly, who oversaw revisions of rules for the auction: “I’m really excited to get to the next stage: the winners bringing varied CBRS wireless offerings, including 5G, to American consumers and enterprises.”

Cox Communications, at $212.8 million, was among the big winners. Windstream was at $38.5 million, Midcontinent Communications at $8.8 million, among other cable and telco ISPs. Bidders can't comment yet under FCC rules, many noted when we asked them for their CBRS plans. There were 228 bidders.

“Verizon was the most aggressive,” MoffettNathanson’s Craig Moffett told us. "Cable operators did get out of the auction spending a little bit less than we would have guessed.” The big surprise was Dish, Moffett said: “They were already spectrum rich and cash poor. I’m not sure anyone would have said going in that the highest and best use of their next billion dollars was to buy even more spectrum.”

Cable operators matched expectations, while Verizon’s were higher “reflecting that its need for spectrum may be even more than we thought,” said New Street’s Blair Levin. “As has been true for many auctions in the last decade, the big question” is what are Dish and Chairman Charlie Ergen doing, he said. The company didn't comment.

“Dish is a surprise winner, again,” said Cowen’s Paul Gallant. “Cable picking up mid-band gets them more owner’s economics, which could lead them to switch from playing defense to offense in wireless.” Recon Analytics’ Roger Entner said cablers will use the spectrum “for wireless offload and rounding out the cable footprint to connect households that are not yet connected physically.”

“This is the single largest economic validation of the shared spectrum market opportunity,” said Federated Wireless Vice President-Legal Advocacy Jennifer McCarthy. With general authorized access deployments “growing exponentially each week, we look forward to adding PAL management, including license leasing, to our service,” she said. The number of bids, with 91% of 22,631 available licenses sold, is “an absolute validation of the shared spectrum model and its capacity to create a vibrant expanded wireless market,” she said. “This lays the groundwork for a robust secondary license market,” McCarthy said.

Bids by cable likely show they “gained confidence in their ability to compete against the national carriers in wireless,” said Sasha Javid, BitPath chief operating officer. “Like Dish, these cable companies may have also felt that the CBRS auction provided a better opportunity than the C-band auction to pick up mid-band spectrum relatively cheaply.” Javid was most surprised by the bids by some electric utilities to cover their footprints: “This speaks to a desire to manage their own private wireless networks.” Southern California Edison didn't comment.

“Congrats to all the @WISPAnews members who secured #CBRS licenses!” tweeted Wireless ISP Association President Claude Aiken: “So many first time #spectrum auction participants. Smaller geographic license areas = more bidder participation = more money in the Treasury.” The "bidding activity was fierce, especially so in localities outside of major metro areas,” emailed Louis Peraertz, WISPA vice president-policy.

Brett Glass, owner of Wyoming WISP Lariat, wasn’t satisfied. “Far too few secured licenses, due to WISPA’s ineffectiveness in preserving census tracts” as license sizes, he tweeted in response to Aiken. The FCC instead sold licenses by county.

The results “strongly support our initial conclusion that the auction was a phenomenal success,” said CBRS Alliance President Dave Wright. “With entities from the mobile, cable, WISP, electric, education, municipal, manufacturing, oil and gas and other sectors securing licenses, along with a few individuals apparently, it is clear that … 4G and 5G solutions in the CBRS band appeal to a large and diverse set of users."