Spectrum Auction Results Tough to Forecast

April 30, 2015

By J. Sharpe Smith

Smith

May 1, 2015 — $45 billion – the gross bids at the AWS-3 spectrum auction — is the astounding number that sticks in everyone’s minds when it comes to the value of spectrum. But there is a misconception that spectrum prices have soared ever upward since auctions were implemented, according to the keynote speech by Craig Moffett, founder of MoffettNathanson Research, delivered at the Wireless Infrastructure Show, April 29, in Hollywood, Florida.

“There is a narrative out there that trees grow to the sky and spectrum prices go up with them, and there is only one direction for spectrum prices and that is up,” he said. “People believe that spectrum prices have been on this incredible upward trajectory over the years; however, the prices paid per megahertz of spectrum both at auction and in private sales have not trended upward over the years.”

In fact, Moffett said spectrum prices tend to be erratic and are not a function of supply and demand but of a “concentrated buyer market.” In certain cases, the same spectrum has been re-auctioned at a later date at a much different price.

“The number of buyers at any time drives evaluations. It is not a simple commodity,” he said. “No discernible patterns exist in either in either auctioned spectrum prices or private spectrum sale prices. It is very unsatisfactory for a forecaster.”