UPDATE 1-Sprint says will sit out of 2016 airwaves auction

27 Sep 2015 | Author: | No comments yet »

Sprint Plans to Sit Out Next U.S. Auction of Airwaves.

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 Corp. said it won’t take part in a U.S. government airwaves auction, saying its spectrum holdings for current and future customers are “sufficient.” The company, based in Overland Park, Kansas, said Saturday in a statement that it will bolster coverage within its existing network.For every iPhone sold under their aggressive, new renewal plans, dueling carriers Sprint and T-Mobile are spending between $200 and $250, according to an initial estimate by New Street Research.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.Earlier this year, the government spent a lot of time convincing TV broadcasters to give up wireless spectrum to cell carriers, who forked over a lot of money for those airwaves.

S -2.05 % said it plans to sit out a coming auction of wireless airwaves, a surprising decision that will save the carrier billions of dollars but could deprive its network of upgrades in the future. 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. That’s about half the average subsidy of around $450 a few years ago that desperate carriers were funding for new iPhones, which retail for $650 and up, noted Jonathan Chaplin, an analyst at the firm. 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. 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.

While T-Mobile had weaned itself off subsidizing the iPhone entirely last year, this week’s $5-a-month “Jump On Demand” lease plan for the iPhone 6s was triggered by Apple’s own offer of a $32-a-month yearly renewal plan earlier this month. Sprint supports the Federal Communications Commission’s efforts to bring this long-standing proceeding to a pro-competitive conclusion,” the company said. “Verizon, AT&T, T-Mobile and multiple financial and other non-carrier bidders will assure strong demand and a hugely successful auction,” said Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition, representing most of a hundred stations interested in putting spectrum into the auction at the right price. Sprint also sat out the AWS-3 wireless spectrum auction, while Verizon, AT&T and T-Mobile were all players. (http://www.broadcastingcable.com/news/washington/aws-3-tops-42-billion/1…). 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.

Low frequency airwaves travel farther and penetrate buildings better than airwaves at higher frequencies, meaning carriers can cover larger areas using fewer cell towers. In the statement, Sprint said that it has already “started a major effort to increase coverage and capacity by densifying its network, and increasing the number of cell sites using its existing spectrum.” “Sprint is already deploying new technologies, such as carrier aggregation, that unlock the potential of its strong 2.5 GHz position,” the statement added. 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.

Update: T-Mobile CEO John Legere, who likes beating up on Sprint on Twitter (as does Claure on T-Mobile), thinks Sprint isn’t participating for a different set of reasons. Sprint obtained a large swath of its higher frequency airwaves when it acquired wireless Internet provider Clearwire Corp. in 2013 Underlying Sprint’s decision to stay out of the next auction could be financial trouble. 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.

A Sprint spokesman said the carrier is “prioritizing its financial resources to improve our network coverage, capacity, speed and reliability now and over the next few years—and we already have the spectrum we need to do so. 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 actuion, the handover will take several years for the new spectrum to be fully available to the carriers.

The carrier has seen dramatic improvements in call quality and data speeds in the past year, according to independent network analytics firm RootMetrics.

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