Dish Overpaid for AWS-3 Spectrum, Verizon CFO Says
Many unknowns remain about the TV incentive auction and it's still too early to make predictions about Verizon’s participation in the spectrum sale, Chief Financial Officer Fran Shammo said Tuesday at a Wells Fargo investor conference. Shammo said Verizon sees the 600 MHz spectrum as at best useful for supplementing its national 700 MHz footprint. He downplayed any Verizon interest in Dish Network’s AWS-3 holdings.
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Broadcasters have now been told what kinds of reimbursements they can expect through the auction and are running their own models, Shammo said. “We don’t even know what’s going to be auctioned off” and more won’t be known until next year, he said. Once Verizon learns what markets will be sold and the rules are finalized, “we’ll decide what areas we may be interested in,” Shammo said.
Shammo noted that the FCC is selling low-band spectrum. “It’s very good for coverage, not good for capacity,” he said. “We build our LTE on 700 MHz contiguous across the United States, so the 600 MHz would not be our top priority spectrum. There may be some areas where we might be interested to do fill-ins.” Because the 600 MHz spectrum can cause interference problems to the 700 MHz spectrum, deploying it will be more costly, he said.
The record-setting AWS-3 auction offered capacity spectrum, Shammo said. The 600 MHz spectrum "is unique for some but not for all. For us, it would be nice to have but not an actual priority for us like AWS-3 was.”
Verizon sees Dish Network as having overpaid for its AWS-3 spectrum, Shammo said. “I guess we couldn’t avoid this question." Verizon spent $10.4 billion in the AWS-3 auction, he said. “If I wanted more spectrum, I would have bought it in the auction.” Verizon “walked away” from Chicago and New York because the price was too high, he said. New York and Chicago and a few other major markets would have cost Verizon $6 billion, he said. “I can build the same capacity for $1.5 billion” and have it ready before the AWS-3 band will be cleared in 2018, Shammo said. “Why would I go out and buy spectrum and be held hostage by a third party?” he asked. “It makes no sense to do that.” Dish had no immediate comment.
Shammo indicated Verizon is at least interested in the AWS-3 licenses being returned by Dish’s designated entities for reauction (see 1511090015). “It gives us another opportunity to go to the well again,” he said. Shammo said the reauction seems unlikely before late 2016 “at the earliest.” But Shammo said the carrier isn't “spectrum short” and only 40 percent of its spectrum today is used for LTE traffic. “We have plenty of runway here for capacity purposes,” he said.
Shammo said the IoT can be built using 4G technology and doesn't require 5G. “Five G is a very different technology,” he said. It's key especially to delivery of high-speed video in densely populated area, he said. Verizon is doing trials of 5G now in its labs with more to come next year, Shammo said. “We want to make sure we set the standards for the industry and move forward.”