Spectrum auctions for AWS-3 mid-band spectrum were completed in the first quarter of 2015 in the United States as well as in Canada.

The US AWS-3 auction generated record proceeds for the US treasury, to the tune of US$41 billion net of rebates, and set a new, much higher average price threshold for any spectrum sold at auctions in the US, let alone the usually less attractive mid-band spectrum. The average price for all unpaired and paired spectrum ended at $2.21 per MHz-pop.

A very different script unfolded in Canada. The one-round sealed-bid auction, conducted the first week of March with a 30 MHz set aside for mobile new entrants in service out of a total of 50 MHz of paired spectrum, raised C$2.1 billion or about US$1.7 billion. Prices paid (in $US) ranged from $0.08 to $2.41 per MHz-Pop, all for paired spectrum.

Key observations:

  • The outcome of each auction was significantly impacted by the rules put forward by the auctioneer. Rules ensuring competition amongst the larger carriers so that not everyone can walk away filling up their spectrum needs were key to the increasing prices paid.
  • A price in the range of $2.50 US per MHz – Pop appears to be a new benchmark for paired blocks of mid-band spectrum in this context.
  • This price point may get tested in upcoming auctions in major European markets, depending on how auction rules can increase competitive intensity between existing and potentially new carriers.

The 2500 MHz auction is about to get underway in Canada in April 2015. This will be a combinatorial clock auction (CCA) process similar to that done for 700 MHz in 2014. The 2500 MHz auction includes a limit on total MHz that can be acquired for all bidders. This again provides some level of assurance for new entrant carriers that they can secure spectrum in this process.

More to come as the story unfolds.

LYA brings extensive auction experience and expertise, with both SMRA and CCA auction formats and their variations. The LYA Auction Platform has been used extensively by bidders for simulations and mock auctions in preparation for spectrum auctions.

LYA is an expert in spectrum valuation and has conducted spectrum valuations for many industry stakeholders. LYA has also published independent research reports on prices in 4G spectrum auctions around the world.