FCC Broadcast Spectrum Auction Falters and Fails to Meet Target; And Other News

FCC Broadcast Spectrum Auction Falters and Fails to Meet Target

The Federal Communications Commission’s incentive auction has come to a screeching halt after hitting a speed bump, with the auction topping out at $23.1 billion, falling well below the target $88.3 billion. Overall, forward bidding activity was sluggish, plodding along at a pace of $1 billion in winning bids per round over the course of 27 rounds. It was not enough to reach the $86 billion needed to pay television broadcasters for the spectrum assets and fees for clearing and repackaging license holders.

“The ball is now back in the court of TV broadcasters, who will need to decide whether to accept lower prices for their spectrum or bet on future opportunities to cash in on their airwaves,” said Dan Hays, a principal with PwC’s strategy and consulting group. “We anticipate that many will choose the certainty of the auction and roll the dice in the second stage starting in the coming weeks.”

Forward auctions asks bidders to indicate how much spectrum they are willing to purchase at a rate set by the FCC. The demand was underwhelming, exceeding supply in only two markets: Raleigh, NC and Brownsville, TX. The paltry showing undermined the notion of a looming spectrum crisis that several federal policymakers have warned of.

In all, the first round managed to sell 126 MHz of spectrum owned by TV broadcasters, with up to 100 MHz available for bidding. 104 companies bid for the airwaves, including Verizon, T-Mobile, and AT&T, with Sprint noticeably absent.

While the FCC has plans to proceed to the second round of bidding and lower the clearing target in light of the above, it has yet to disclose further information.

“The FCC will release a public notice announcing details about the next stage, including the clearing target for stage two, and the time and date at which bidding in stage two of the reverse auction will begin,” said the FCC via its public reporting system.

Reverse auctioning entails turning to the television broadcasters who have offered up spectrum to state their price. The second stage is expected to offer a target 114 MHz of total cleared spectrum, down from the original 10 paired blocks of 126 MHz spectrum, with up to 90 MHz available for bidding.

This may result in driving down the total proceeds gained by broadcasters, leaving FCC Chairman Tom Wheeler with the unenviable task of convincing them to lower their expectations. Furthermore, the targeting of high spectrum bands for 5G service may also contribute to depressed prices for lower spectrum bands. The second round is expected to commence on September 13.

SK Telecom Continues to Expand Its Nationwide LoRaWAN Network

Last month, South Korea telco SK Telecom unveiled its nationwide LoRaWAN network, which covers 99% of the population. LoRaWAN networks are optimized for low-bandwidth and low-power devices, making it ideal for supporting the internet of things. Now SK Telecom has disclosed that it has invested more than $89 million on its network, platform and app development, seeking to connect more than 4 million devices to the network by the end of 2017.

“SK Telecom is proud to announce the nationwide deployment of a LoRaWAN-based commercial network as it marks the first important step towards realizing connectivity between infinite number of things, going beyond the traditional role of telecommunications centered on connectivity between people,” said Lee Hyung-hee, President of Mobile Network Business at SK Telecom. “Going forward, SK Telecom will develop and offer a wide variety of IoT services designed to offer new value for customers, while working closely with partners including SMEs and startups to vitalize the IoT ecosystem.”

The LoRaWAN network utilized SemTech’s proprietary LoRa wireless RF technology, which allows a sensor network to operate on low power while maintaining a strong connection over extended distance. Superior penetrability, secure connectivity, low battery use and streamlined implementation are critical factors to consider in rolling out LPWAN networks.

The company has announced that prices will start at KRW 0.35 a month, which provides for data consumption on a range of 100 kilobytes to 100 megabytes. These prices are relatively low compared to those for its national LTE-M network, which are ten times higher.

In addition, SK Telecom has rolled out ThingPlug, a oneM2M platform, and is developing utility metering, location tracking and monitoring services targeting the auto, retail, and construction sectors. It has also partnered with Samsung and LG to release smart home products.

The presence of a national IoT network will have palpable economic effects, says Godfrey Chua of Machina Research, allowing developers and enterprises to scale up the number of machine connections exponentially while driving down prices. “As an enterprise, the way I’m going to meaningfully expand my business is through the volume, which is what the IoT business promises: scale.”

According to SK Telecom, the company plans to launch a total of 20 LoRa-based IoT services by the end of this year, including nifty features such as a manhole monitoring service in September and real-time shared parking service in October.

Ericsson Makes Waves in 5G RAN

Ericsson claims to have built the world’s first commercial 5G radio access network product, called AIR 6468, a mobile network product which adheres to the 3rd Generation Partnership Project’s 5G New Radio specifications. The Scandinavian telco manufacturer claims that it is the first commercial product to support 5G network deployments. AIR 6468 radio will support time division duplex (TDD) LTE deployments so it can support 4G and eventually 5G as well, making it flexible enough to support the existing backbone of networks while accommodating future 5G deployments.

As an aside, Ericsson has announced its intentions to release a frequency division duplex version (FDD) of the product as well at an unspecified time. The mobile network equipment also addresses the need for multiple-input-multiple-output (MIMO) array support.

AIR 6468 features an advanced antenna system comprising 64 receivers and 64 transmitters, which enable beamforming and Massive MIMO with greater throughput and five to six times more capacity than current RAN. Overall, a mobile network product that supports TDD and MIMO has been lauded by wireless carriers.

“As we accelerate toward 5G, it’s beneficial to have a flexible radio platform that can be deployed not only for LTE, but also versions of future 5G NR standards,” said Tom Keathley, SVP for wireless network architecture and design at AT&T, in a statement. The product will be made available for testing by developers by 2017, so it’s not quite available yet.

French Telco Bouygues Soars in H1 2016

The French telco Bouygues Telecom has seen its fortunes buoyed by a boom in subscriptions in the first six months of the year, driving a surge in earnings. In all Bouygues picked up 543,000 new mobile customers during the first half of 2016, bringing its total up to 12.4 million.

58% of its mobile customers now use 4G services, up from 42% last year. The subscriber growth can in large part be attributed to the misfortunes of its main rivals Orange and Numericable-SFR, which lost 191,000 and 656,000 subscribers respectively in the first half of this year. Orange currently enjoys 24.4 million subscribers whereas Numericable has 16.6 million. Overall, Bouygues posted 151 million euros in net profits during the three months leading up to June, up from EUR115 million last year. Sales from its telecom unit also rose 6% to EUR2.29 billion in the first half of the year.

Bouygues’ rivals offer quad-play bundles of fixed-voice, TV, mobile, and broadband, creating an opportunity for growth in the fixed line market. Earlier this, Bouygues offered its telecom division for sale to Orange, at a price of EUR10 billion, which would have reduced the number of French national carriers from to four to three.

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