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$44.6 billion in net bids (up from US$41.3 billion following the FCC’s August 17, 2015 order to deny US$3.3 billion in small business credits claimed by Northstar and SNR Wireless), 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 US$2.20 per MHz-pop.
A very different script unfolded for the AWS-3 auction a few weeks later 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. Incumbent carriers paid the higher prices while new entrants got rock bottom prices.
- The outcome of each auction was significantly impacted by the rules put forward by the auctioneer. Rules ensuring competition amongst all carriers so that not everyone can walk away filling up their spectrum needs were key to the high prices paid in the US. In Canada, the large spectrum set aside coupled with awarding licenses at the second price yielded below market prices for mobile new entrant carriers.
- Based on US prices and on prices paid by large carriers in Canada, a price in the range of US$2.50 per MHz–pop – or actually US$2.70 excluding denied small business credits – could be seen as a new benchmark for paired blocks of AWS spectrum in the context of exponential needs for mobile broadband services.
- However, as another point of reference for mid-band spectrum, one month after the AWS-3 auction, in April 2015, the 2500 MHz auction got underway in Canada. This was a multi round, second price combinatorial clock auction (CCA) process similar to that done for 700 MHz in 2014. The 700 MHz auction yielded record proceeds. Not so for the 2500 MHz auction. The 2500 MHz auction included a cap on total MHz that could be acquired for all bidders, but no spectrum set aside. In this case, the average price paid was only C$0.29 per MHz-pop, an average covering both paired and unpaired spectrum.
Please see our related post on the Canadian 2500 MHz Auction.
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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.