There are growing signs that the 600-MHz incentive auction will not release as much spectrum as once hoped, nor raise as much money as some had hoped.
In addition to the decision by Sprint to sit out the auctions entirely, removing a major bidder for the reserve spectrum, now Verizon is hinting that it sees less value in the 600-MHz bands, because it already relies on 700-MHz spectrum.
Verizon has said it does plan to bid for 600-MHz spectrum, but Verizon also seems to be signaling that it has other options, and might not bid as aggressively as some had thought likely.
To be sure, such statements might, aside from other reasons, be positioning tactics, designed in part to dampen expectations that Verizon would be forced to bid “whatever it took” to acquire spectrum in the 600-MHz auction.
Perhaps Verizon also is signaling that it is less interested in 600-MHz spectrum than some had hoped Verizon would be, perhaps tempering expectations of license sellers and containing prices.
On the other hand, such statements also signal that a potential deal with Dish Network for wholesale access to its spectrum at 2-GHz is perhaps more interesting. That might also dampen price expectations for 600-MHz spectrum.
"Higher frequency spectrum is capacity and that's really what we need at this point in time," said Fran Shammo, Verizon CFO.
But it also would be necessary for Verizon to conclude any such deals before the 600-MHz auctions start, to comply with anti-collusion rules.
Most mobile spectrum is valued on either its coverage or its capacity dimensions, the basic trade off being that lower-frequency spectrum is better for coverage, but less valuable for capacity, while higher-frequency spectrum is better for capacity than coverage.
Verizon arguably has a reasonable amount of “coverage” spectrum, but not so much “capacity” spectrum.
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