Sprint Bows Out of 2016 Airwaves Auction: Good Move Or Gamble?

28 Sep 2015 | Author: | No comments yet »

Sprint Drops Out of Spectrum Auction.

“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 will not participate in the US incentive auction of 600MHz, scheduled for early 2016, claiming it already has enough spectrum, plus the means to make its existing supply run more efficiently. 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. 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. 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 operator also stated its support for reform of so-called special access, the last-mile fixed connections that are overwhelmingly controlled by AT&T and Verizon. Low-frequency airwaves travel farther and penetrate buildings better than airwaves at higher frequencies, meaning carriers can cover larger areas using fewer cell towers. 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.

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. Verizon has said it does not need any more huge blocks of spectrum, though recent reports suggest the company is weighing a lease of spectrum held by Dish. 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?

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.

You’ll get to keep your current user name (as long as it doesn’t contain invalid characters, in which case you’ll have to go through a few extra steps to make the transfer), and all your old comments will eventually (not immediately) migrate with you. 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.” After the coming auction, it will take several years for the new spectrum to be fully available to the carriers.

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