Unencumbered AWS-III Spectrum Worth $2.8 Billion

A Phoenix Center analysis released today finds that the FCC's proposed nationwide 25 MHz license in the Advanced Wireless Services ("AWS") band would fetch at auction approximately $2.8 billion if the license did not contain substantial conditions or encumbrances. Phoenix Center Chief Economist George S. Ford's Perspective utilizes the results of prior auctions in the AWS band and the recent record-setting 700 MHz auction to make this estimate, which resulted in an auction value of approximately $0.40 per MHz-pop.

Last week, the Federal Communications Commission proposed to auction a single, nationwide 25 MHz license (2155-2180 MHz) in the Advanced Wireless Services band, referred to as the AWS-III auction. The FCC proposed substantial conditions upon this license, including a commitment that the licensee utilize 25% of the capacity of the license to provide free wireless Internet service, open access handset compatibility obligations, aggressive build-out requirements, and a requirement that the licensee offer network-based filtering technology to shield users from adult-oriented content. Such conditions can have a substantial impact upon the value of spectrum. For example, Phoenix Center Policy Bulletin No. 20 demonstrated that identical open access conditions applied to the Upper C block licenses in the 700 MHz auction decreased the value of those licenses by 40%.

"There may be significant social or consumer value to many of the conditions proposed by the FCC for the AWS-III license," said Phoenix Center Chief Economist George S. Ford. "But policymakers should be aware of the impact that their decisions have upon the value of spectrum and the business case for offering wireless services over encumbered licenses."

The complete copy of the Perspective, Calculating the Value of Unencumbered AWS-III Spectrum, may be downloaded free from the Phoenix Center's web page at: http://www.phoenix-center.org/perspectives/Perspective08-01Final.pdf.

The Phoenix Center is an international, non-profit 501(c)(3) organization that studies broad public-policy issues related to governance, social and economic conditions, with a particular emphasis on the law and economics of telecommunications and high-tech industries.

Posted to the site on 25th June 2008