Sprint announced it will not join airwaves auction

28 Sep 2015 | Author: | No comments yet »

Sprint Calls Timeout On Upcoming Wireless Spectrum Auction, T-Mobile CEO.

“Sprint’s focus and overarching imperative must be on improving its network and market position in the immediate term so we can remain a powerful force in fostering competition, consumer benefits and innovation in the wireless broadband world,” Sprint CEO Marcelo Claure said in a statement. “Sprint has the spectrum it needs to deploy its network architecture of the future.” The auction will allow broadcasters to sell their unused spectrum to mobile carriers, and get a cut of the purchase price. Phone carriers usually have a voracious appetite for wireless spectrum, and for good reason: they don’t want to lose your business because their networks are overloaded or missing coverage.

Spectrum is what carries wireless signals when cellphone and other mobile device users stream video, post photos online, check websites and use other popular features of the devices.Sprint Corporation has made a decision to stay away from the 2016 airwaves auction as the company management feels that their current spectrum holding is enough for the ongoing network upgrade. The spectrum up for bid next year is particularly valuable because it can carry wireless signals long distances between cell towers and easily inside buildings for better customer connections.

S -2.05 % said it plans to sit out a coming auction of wireless airwaves, a decision that will save the carrier billions of dollars but could deprive its network of upgrades in the future. Spectrum allocation might seem like a boring topic, but with more and more people picking up bandwidth-intensive gadgets, carriers need spectrum to support them. The provider just announced that it’s passing on the FCC’s upcoming 600MHz auction after determining that its existing airwaves are “sufficient” for its future needs. Federal Communications Commission will auction off valuable 600 megahertz airwaves that can travel long distances and penetrate buildings to wireless carriers in March 2016”.

The FCC specifically came up with forward auction rules, including a reserve (set-aside) of the best spectrum for carriers not named AT&T and Verizon, to encourage competitive wireless cmopany participation, but Sprint said Saturday that it didn’t need any more spectrum. One of the big concerns from smaller carriers like Sprint and T-Mobile going into this auction, though, was whether their larger rivals, Verizon and AT&T, would use their sizable war chests to snap up all the desirable spectrum.

Sprint said on Saturday that its airwaves at present are “sufficient to provide its current and future customers great network coverage.” The U.S. wireless carrier is about to commence on another major network overhaul it says will sharply improve data speeds. Sprint will not participate in the upcoming FCC broadcaster incentive auction, the company announced Saturday, but one interested broadcast representative says there will still be plenty of bidders and bucks. Bond analyst Dave Novosel with Gimme Credit has told clients that financing such bids presents a challenge to T-Mobile and Sprint because it probably would force them to take on significant amounts of additional debt. The agency agreed to some restrictions—it set aside 30 megahertz of spectrum per market for smaller companies—but did not give T-Mobile everything it wanted. There’s only so much spectrum to go around, and even less when you narrow the field to frequencies appropriate for the data transmission needs of the mobile phone industry.

Sprint is betting that there won’t be a big spike in demand that requires more spectrum than it has, or that the lack of 600MHz support won’t hobble compatibility or performance down the line. Sprint garnered a swath of its higher frequency airwaves when it acquired wireless Internet provider Clearwire Corp.in 2013, the Wall Street Journal reported. Remember how Sprint jumped on WiMAX in order to have 4G data before everyone else, only to regret its decision and spend a lot of time playing catch-up with its LTE-toting rivals?

Sprint burned $2.2 billion in cash in the second quarter ended June 30. “That is more important for Sprint and its customers than investing in [this] spectrum that won’t benefit our subscribers until 2020 at the earliest”. The carrier has not turned an annual profit since 2007, the Journal noted, and earlier this month, Moody’s downgraded its credit rating two notches, saying it lacked confidence in the company’s network overhaul plan.

There are many competing uses for spectrum, such as TV broadcasts, FM radio stations, and so forth, and so the government has taken it upon itself to manage available spectrum by licensing certain frequencies through these auctions. An FCC official said on Sunday that the agency wasn’t surprised Sprint decided not to participate given the public hints it has made in the past few months, and pointed out that the last two major auctions were a success even though Sprint wasn’t involved. Sprint’s decision to bow out means T-Mobile may have an easier route to winning those airwaves unless other bidders, like technology or cable companies, decide to participate.

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