DISH, CLWR Among Those with Upper Hand in Spectrum Quest, Says BTIG
BTIG Research's Walter Piecyk today weighs in on the evolving situation of the Federal Communications Commission 's intent to give the U.S. wireless industry more spectrum , a situation with consequences in particular for Sprint-Nextel ( S ), Dish Network ( DISH ), MetroPCS ( PCS ), and every other wireless operator. The focus, writes Piecyk, is the FCC's release yesterday of a 155-page report that bears upon the viability of putting up some frequencies for auction, called the " PCS Expansion Band ," frequencies at 2000 to 2020 megahertz, currently used by Dish. Freeing up that spectrum for auction, by giving Dish other spectrum to use instead, is tied to yet another chunk of spectrum: the 1755 to 1850 megahertz bands, which are used by the Department of Defense . That report issued yesterday says the DoD couldn't vacate that spectrum in under five years or possibly longer. That, suggests Piecyk, puts the kibosh on any quick remedy for carriers' spectrum needs. The result is spectrum prices will go higher , and wireless plans will rise in price for consumers as they use more and more data services. As Piecyk puts it, the industry was praising this report yesterday but they're deluding themselves:

BTIG Research’s Walter Piecyk today weighs in on the evolving situation of the Federal Communications Commission‘s intent to give the U.S. wireless industry more spectrum, a situation with consequences in particular for Sprint-Nextel (S), Dish Network (DISH), MetroPCS (PCS), and every other wireless operator.

The focus, writes Piecyk, is the FCC’s release yesterday of a 155-page report that bears upon the viability of putting up some frequencies for auction, called the “PCS Expansion Band,” frequencies at 2000 to 2020 megahertz, currently used by Dish.

Freeing up that spectrum for auction, by giving Dish other spectrum to use instead, is tied to yet another chunk of spectrum: the 1755 to 1850 megahertz bands, which are used by the Department of Defense.

That report issued yesterday says the DoD couldn’t vacate that spectrum in under five years or possibly longer.

That, suggests Piecyk, puts the kibosh on any quick remedy for carriers’ spectrum needs. The result is spectrum prices will go higher, and wireless plans will rise in price for consumers as they use more and more data services.

As Piecyk puts it, the industry was praising this report yesterday but they’re deluding themselves:

Yesterday, industry participants and consumer advocate groups lined up to laud the efforts of the Department of Commerce, Department of Defense and ultimately President Obama for finding an additional 95 MHz of spectrum but the reality is that this report throws a bucket of ice cold water on any hopes of making this spectrum usable in a reasonable time frame. Wireless operators are already increasing prices and have universally cited a need for spectrum within 3 years, not 10.

Another result, writes Piecyk, is that carriers with spectrum they can broker, including Dish, and Clearwire (CLWR), MetroPCS, privately held SpectrumCo., and privately held NextWave, seem to gain an upper hand. Other carriers that need to expand their spectrum, especially Sprint, seem to be the losers, he opines.

The next battleground could involve M&A, say, for MetroPCS. But attention will also turn to how much spectrum AT&T (T) and Verizon Communications (VZ) will be allowed to amass:

The FCC and Justice Department’s deliberations on Verizon’s proposed purchase of SpectrumCo’s spectrum are now increasing in importance within the industry. Investors expect this deal to be approved by industry participants are worried about how much the FCC is planning to dig in their heels about spectrum aggregation by the largest carriers.

Dish Network shares today are down 25 cents, or 0.8%, at $32.38. Sprint shares are down a penny at $2.82. PCS stock is up a penny at $9.34. Clearwire shares are down 2 cents, or 1%, at $2.31.

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