Vint Cerf Megan Smith Marty CooperMarty Cooper is right: If we are efficient, "There is no spectrum shortage and there never will be." Showing there's enough spectrum if used efficiently, Marcelo Claure concludes "[Our] spectrum holdings are sufficient to provide its current and future customers." Claure has ~100 MHz in high frequencies, so much he is thinking of using some of it for backhaul. (The FCC should stop that, and other many wasteful practices, in the name of efficiency. But true efficiency is generally ignored.)   

Cooper, the inventor of the cell phone, was joined by Marconi Fellows A.J. Paulraj, John Cioffi and Vint Cerf in projecting technical advances that could raise wireless capacity 50-100 times. The engineers convinced me until the companies spent $45B in the last auction. That's 3-4 times as much as the experts I respect predicted. I don't think anyone well informed is certain of next year's results.

Last year could be an anomaly caused by Dish coming in as a spoiler. Verizon CFO Fran Shammo suggests the bids were far more than the use value of the spectrum. He said Verizon could get similar capacity by improving their current network for 60-70% less. I infer they were bidding to exclude competitors. 

600 MHz signals go further and is better with walls, so the TV spectrum coming up in next year's incentive auction is particularly useful. Sprint has massive unused spectrum at higher frequencies and concluded they don't need the 600 MHz spectrum coming available from the TV stations. There may be an additional reason for Sprint to back away: Masa Son apparently decided not to invest the $10-20B. That's as much as the company is worth.

Claure's decision will probably cost the U.S. government many billions in the auction unless DISH decides again to play spoiler/speculator. DISH probably can't or won't risk the $10's of billions that would require, especially because the FCC is challenging their 25% discount. The FCC may have forced Sprint's hand on the bidding but not guaranteeing enough spectrum for two competitors of AT&T/Verizon.

A plausible but not guaranteed scenario: T-Mobile, the only spectrum challenged big telco, almost has to win the block set aside for smaller companies. They would presumably bid against Sprint to a very high price. Meanwhile, AT&T and Verizon can do their usual signalling to keep prices down. But they would bid high to prevent Sprint or T-Mobile getting any of the unrestricted spectrum. 

FCC Chairman Wheeler, under massive pressure from V & T, decided not to reserve spectrum for two competitors. He perhaps assumed one of T-Mobile or Sprint would need to bid anyway, forcing up V & T. Now, we know they won't.  

Photo is Cooper and Cerf, with U.S. CTO Megan Smith at the Marconi Dinner. Photo by Helen John

Update: Ryan Knutson in the Journal had a point I missed. Sprint didn't bid in the last auction but it did well.

Sprint Statement on the Incentive Auction

– Sept. 26, 2015 - Sprint (NYSE: S), after thorough analysis, announced today that it will not participate in the 600 MHz incentive auction.  Sprint has concluded that its rich spectrum holdings are sufficient to provide its current and future customers great network coverage and be able to provide the consistent reliability, capacity, and speed that its customers demand.

“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,” stated Sprint CEO Marcelo Claure.  “Sprint has the spectrum it needs to deploy its network architecture of the future.”
Sprint has 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 spectrum position.  The company has seen positive results from its infrastructure upgrades in key U.S. markets, as RootMetrics® surveys increasingly show. Sprint is laser-focused on building on that progress and is steadfast in its mission to have a world-class network for consumers and businesses.
As Sprint and other companies densify their mobile broadband networks, timely special access reform, including pricing, terms, and conditions, is more critical than ever to ensure the competition that benefits American consumers.  Sprint supports the Federal Communications Commission’s efforts to bring this long-standing proceeding to a pro-competitive conclusion. 

Sprint has concluded that its rich spectrum holdings are sufficient


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