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FCC Looks to Block Sprint, T-Mobile Joint 600 MHz Spectrum Bid
by Karl Bode 10:07AM Monday Aug 04 2014
Last month we noted that Sprint and T-Mobile were hoping to join forces and bid under a joint venture company in the FCC's 2015 incentive auction of 600 MHz spectrum. That may not float for the FCC, who in a blog post stated that the agency is circulating a proposal that would bar such a play. The goal of the move, argues the FCC, is to level the playing field for companies smaller than Sprint and T-Mobile.

"If two of the largest companies are able to bid as one combined entity in the auction, their combined resources may have the effect of suppressing meaningful competition," Roger Sherman, chief of the FCC's wireless telecommunications bureau, stated in the post.

"Therefore, the item (banning joint bidding) tentatively concludes that joint bidding arrangements between nationwide providers should not be allowed. It also asks questions about such arrangements between providers of different sizes."

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IPPlanMan
Holy Cable Modem Batman

join:2000-09-20
Washington, DC
kudos:1

Well that puts a damper on things...

Oh well, Sprint had a good run... At this rate, it will be T-Mobile acquiring Sprint... From SoftBank.

Pennies on the dollar.

gaforces
United We Stand, Divided We Fall

join:2002-04-07
Santa Cruz, CA

Re: Well that puts a damper on things...

I don't think this will sink the company, but the brain dead hippie Framily advertising will.
--
Let them eat FIBER!

IPPlanMan
Holy Cable Modem Batman

join:2000-09-20
Washington, DC
kudos:1

Re: Well that puts a damper on things...

I just don't see how SoftBank continues to carry Sprint along over the coming years without an appreciable return on investment.

I guess that has to be weighed against what T-Mobile is doing. How long can T-Mobile keep up what it's doing?

gaforces
United We Stand, Divided We Fall

join:2002-04-07
Santa Cruz, CA

1 recommendation

Re: Well that puts a damper on things...

Click for full size
Speedy Gonzales
Only the fastest mouse in Mexico can save them now.
--
Let them eat FIBER!

IPPlanMan
Holy Cable Modem Batman

join:2000-09-20
Washington, DC
kudos:1

1 recommendation

Re: Well that puts a damper on things...

You'd be better off putting a memory stick on Speedy for data than using Sprint's network.

SteelerRaw

@8.28.150.x
Lol that's highly unlikely.

T-Mobile still hasn't been able to turn a real profit. Their "profit" this past quarter was illusory. It was due to $731 million that they received as part of their spectrum swap with Verizon. Also of note, TMUS' cash reserves shrunk significantly during the last quarter. Deutsche Telekom is looking to lessen their exposure in the US market. Given that goal, acquiring a carrier the size of Sprint (assuming that SoftBank would even want to sell) would be a counterintuitive move.
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1

Re: Well that puts a damper on things...

said by SteelerRaw :

Lol that's highly unlikely.

T-Mobile still hasn't been able to turn a real profit. Their "profit" this past quarter was illusory. It was due to $731 million that they received as part of their spectrum swap with Verizon. Also of note, TMUS' cash reserves shrunk significantly during the last quarter. Deutsche Telekom is looking to lessen their exposure in the US market. Given that goal, acquiring a carrier the size of Sprint (assuming that SoftBank would even want to sell) would be a counterintuitive move.

You realize... If T-mobile wanted to they could easily slow down network investment slightly and "turn a profit". If their financial prospects were ever so dim as you rabidly insist, their stock value would have plummeted. Given their massive quarterly customer acquisitions and revenue growth they're obviously in a very, very good position right now. Their main focus is spending all available revenue on network and subscriber expansion to reach greater economies of scale.

If this is still difficult for you to understand I recommend you avoid investing.

IPPlanMan
Holy Cable Modem Batman

join:2000-09-20
Washington, DC
kudos:1

Re: Well that puts a damper on things...

Agreed. They'll be able to slow down Capital Expenditures once they finish deploying LTE to replace 2G and deploy 700 MHz spectrum. They're in a really good place and offer the most consumer friendly policies of all the carriers.

SteelerRaw

@8.28.150.x
said by sonicmerlin:

You realize... If T-mobile wanted to they could easily slow down network investment slightly and "turn a profit". If their financial prospects were ever so dim as you rabidly insist, their stock value would have plummeted. Given their massive quarterly customer acquisitions and revenue growth they're obviously in a very, very good position right now. Their main focus is spending all available revenue on network and subscriber expansion to reach greater economies of scale.

If this is still difficult for you to understand I recommend you avoid investing.

Thank you for your recommendation. My portfolio has been doing reasonably well to date so I believe that it's best for me to continue thinking for myself and trusting my own analyses.

You realize that TMUS has apparently already been doing as you've suggested as their Q2 CAPEX was down both sequentially and Y-o-Y. This, despite them currently having the fewest POPs covered of the four major carriers and they already had the smallest CAPEX out of the four. As for their stock plummeting, there's almost no chance of that happening with the acquisition talks that have surrounded them for some time now.
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1

Re: Well that puts a damper on things...

T-mobile's projected capes for 2014 is between $4.3 billion and $4.6 billion, compared to $4.2 billion last year. They averaged $2.7 billion/year from 2010-2012. This might shock you, but their capes is smaller than AT&T and Verizon's because they have a smaller customer base. Right now they're sacrificing short term profits, which they would be making quite a bit of if their capex and marketing were at normal levels, to expand their network as fast as possible.

They've managed over 1 million net adds for the past 5 quarters. 1.5 million for each of the last 2. Their revenue keeps on growing. Their churn is at 1.7%, Down From 2.5% in 2012. Compare that to Sprint, who keeps on losing customers every quarter. T-Mobile has a lot of momentum right now, and they know expanding their coverage is crucial to keeping their new additions. But overall they're in a very good position to reap profits in the long term.

Annon

@68.62.236.x

1 recommendation

Because you know, larger companies don't exist that can outbid them.

It's stupid.

No smaller companies are going to win because AT&T and Verizon are the two largest and either one of them can outspend Sprint or T-Mobile.

The point of them combining was so they stood a chance against the larger ones.

Once again, our FCC fails. We are not going to see any smaller companies ever in competition because the market is too far along. Who can afford a startup cell company with so much already out and about.

Now days they all come out and rent tower space or spectrum from the big boys anyway.

SHABAZZ

join:2008-07-13
Seattle, WA

1 recommendation

Re: Because you know, larger companies don't exist that can outbid them.

Annon, both Deutsche Telekom & Softbank have the capital to purchase spectrum if they so choose. And both Verizon & AT&T both sold off the majority of their tower assets years ago. Companies like American Tower lease space to multiple carriers and there are often cell towers with many operators sharing one pole. That said, the FCC is a failure! Not because they blocked two capable companies from bidding together on spectrum but because they lack the authority to enforce mandates. Carriers ignore rules/guidelines while courts overturn their mandates. If you want the FCC to actually work they need authority to do their job as well as "actual" engineers instead of politicians and lawyers to lead it...
kinda pissed

join:2012-06-06
Newsoms, VA

Re: Because you know, larger companies don't exist that can outbid them.

said by SHABAZZ:

Annon, both Deutsche Telekom & Softbank have the capital to purchase spectrum if they so choose. And both Verizon & AT&T both sold off the majority of their tower assets years ago. Companies like American Tower lease space to multiple carriers and there are often cell towers with many operators sharing one pole. That said, the FCC is a failure! Not because they blocked two capable companies from bidding together on spectrum but because they lack the authority to enforce mandates. Carriers ignore rules/guidelines while courts overturn their mandates. If you want the FCC to actually work they need authority to do their job as well as "actual" engineers instead of politicians and lawyers to lead it...

I doubt their overlords aka vz and att would ever allow that
dfxmatt

join:2007-08-21
Evanston, IL

1 recommendation

You do realize ATT and Verizon can't even bid, right? They are barred from bidding here altogether.

bobjohnson
Premium
join:2007-02-03
Orlando, FL

Re: Because you know, larger companies don't exist that can outbid them.

Where'd you get that from? From what I understand T and VZ will be able to buy all but 30mhz that will be reserved for smaller companies. I don't know if that actually became a rule or not
asdfdfdfdfdf
Premium
join:2012-05-09
kudos:3
They are only barred from bidding on the 30mhz of reserved spectrum and only in those markets where they presently hold more than 1/3 of the under 1Ghz spectrum in that market.
Mr Guy

join:2014-05-06
USA
said by Annon :

It's stupid.

No smaller companies are going to win because AT&T and Verizon are the two largest and either one of them can outspend Sprint or T-Mobile.

The point of them combining was so they stood a chance against the larger ones.

Once again, our FCC fails. We are not going to see any smaller companies ever in competition because the market is too far along. Who can afford a startup cell company with so much already out and about.

Now days they all come out and rent tower space or spectrum from the big boys anyway.

Why would you want a smaller and obvious regional carrier to win any of this spectrum? So one area of the country can get it and the other 95% can't? Makes no sense. At least if At&t and Verizon get this spectrum we know 97% of the US will be able to have use of this spectrum.
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1

1 recommendation

Re: Because you know, larger companies don't exist that can outbid them.

No one would be able to use the spectrum because Verizon and AT&T would just place abusively low caps on its usage.
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1
Ah yes, because obviously sprint spending $40+ billion to buy out a competitor will give them ample capital to spend on their network or spectrum.
shmerl

join:2013-10-21

Competition

quote:
If two of the largest companies are able to bid as one combined entity in the auction, their combined resources may have the effect of suppressing meaningful competition
That would make sense if AT&T and Verizon also would be forbidden from participating, since they are too big to allow any meaningful competition to begin with.

robbyglack

@50.243.146.x

let them merge(after licenses are sold to smaller players)

t-mo and sprint are big enough and act enough like verizon and at&t that the FCC should let them merge.

but first they should ensure some smaller start up wireless companies get the spectrum they need to form as new smaller more nimble competitors. we need companies to replace cricket, metropcs and the rural operators that used to have disruptive pricing but have been bought up.

of course the reason the FCC may not like this idea is it would likely mean far lass money at the auction than selling to the already large players. how do we know the real reason for the FCC objection is not that they want sprint and t-mobile bidding against each other(and verizon and at&t) driving up the price at auction.
elefante72

join:2010-12-03
East Amherst, NY

Re: let them merge(after licenses are sold to smaller players)

Here's how the game goes:

1. Smaller guy wins at 1 dollar
2. Big guys strangle smaller guys w/ high roaming wholesale rates or coerces handset manufacturer to make "exclusives".
3. Smaller guy throws up hands.
4. Smaller guy sells at 2 dollars.
5. Bigger guy raises rates to compensate for 2 dollars.
6. Rinse and repeat.

TBH, these should be sold as national auctions, not DMA, since what is needed is lower cost national networks, not scattered patchwork. This isn't the gogo days of 5 guys rolling around in their bentleys w/ bag phones.
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1
So... You want to let someone buy out the smaller, nimbler t-mobile that is ready price disrupting, but somehow enable a much tinier, resource strapped operator to "compete" with spectrum?

Why? And what prevents the major competitors from buying up the smaller one?

cicada

@65.214.242.x

Gov't Regulation FTW!

and we wonder why good things can't get done... let's use regulations to stop people from competing